UniCredit increases its stake in Commerzbank, seeks higher stake in German bank. Through financial instruments, UniCredit obtains the additional Commerzbank shares, and it has filed a request to increase its position to as much as 29.9%.
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| Unicredit increases its stake in Commerzbank |
UniCredit increases its stake in Commerzbank in Germany
UniCredit stated on Monday that it has boosted its stake in German lender Commerzbank to roughly 21% and requested an increase to up to 29.9%.
Commerzbank shares sank substantially in early trading Monday after the German government announced over the weekend that it has no plans to sell any further shares in the country's second-largest lender.
UniCredit stated that it has been present in Germany for than two decades and emphasized the significance of a "strong banking union" in Europe as critical to the bloc's economic prosperity.
The Italian bank purchased the additional Commerzbank shares through financial instruments, according to a statement issued on Monday. UniCredit revealed earlier this month that it had bought a 9% interest in Commerzbank, with the German government providing half of the capital.
"UniCredit thinks that there is significant value that can be unlocked within Commerzbank, either standalone or within UniCredit, for the benefit of Germany and the bank's other stakeholders. However, as was the case with UniCredit, such potential requires action to be realized," the bank stated on Monday.
In order to give UniCredit "complete flexibility and optionality to either retain its shareholding, sell its participation with a floored downside, or increase the stake further," it also stated that it had hedged the majority of its exposure to Commerzbank.
Engaging with Commerzbank's management and supervisory boards as well as its "wider stakeholders in Germany" will determine its next course of action, the bank stated.
Ever since it invested 18.2 billion euros ($20.2 billion) in Commerzbank to save the firm during the 2008 financial crisis, Berlin has been a significant shareholder in the bank.
Last Friday, German government representatives convened to deliberate on the state's stake in Commerzbank. The bank is a "stable and profitable institute," they determined, and its "strategy is geared towards independence." In a statement that was translated into Google, the agency stated, "The Federal government will accompany this until further notice by maintaining its shareholding."
Commerzbank shares were down 6.5% at roughly 4:10 p.m. London time, while UniCredit shares down 3%.
The government is expected to have a significant role in any future purchase of the German bank. UniCredit CEO Andrea Orcel warned local media last week that launching an unsolicited tender effort to buy out other Commerzbank stockholders would be a "aggressive move."
Orcel also cited the German government's "trust" in the Italian bank as the rationale for its ability to acquire 4.5% of the state's interest in Commerzbank.
UniCredit said Monday that it has been in Germany for than 20 years and emphasized the significance of a "strong banking union" in Europe as critical to the bloc's economic success.
Analysts hope that the move from UniCredit would promote greater cross-border consolidation in Europe's banking sector, which is typically perceived as more fragmented than the United States.
UniCredit risks Berlin's anger by increasing holding in Germany's Commerzbank.
UniCredit has stated that it has expanded its holding in German lender Commerzbank, which is likely to worsen tensions with Berlin.
UniCredit's stake in Commerzbank
The Italian bank announced that it was increasing its investment from approximately 9% to 21%, but that the transaction was subject to regulatory approval.
It also disclosed that it had asked the European Central Bank to increase its ownership to up to 29.9%.
The deal effectively makes UniCredit the largest stakeholder in Commerzbank, surpassing the German government, which has showed no interest in acquiring Germany's second-largest bank.
UniCredit, which stunned the market ten days ago by unveiling a nine-percent holding in Commerzbank, announced on Monday that it had acquired an additional 11.5 percent using financial instruments.
Italy's second largest bank also said that it has asked authorization from the European Central Bank to increase its holding to 29.9 percent, falling shy of the 30 percent threshold that would require it to make a public offer for the entire bank.