Exclusive-Commerzbank readies talks with UniCredit but remains defensive
By John O’Donnell and Tom Sims
FRANKFURT (Reuters) -Commerzbank is poised to put CFO Bettina Orlopp in charge of talks with UniCredit when the German bank’s supervisory board meets next week, two people with knowledge of the matter said, as the Italian rival eyes a takeover.
UniCredit recently bought a 9% stake in Commerzbank (ETR:CBKG), expressing interest in a merger. The meeting next week would pave the way for exploratory talks between the two to begin.
UniCredit’s swoop is the most ambitious attempt yet at a pan-European bank merger but it faces considerable political hurdles in Germany ahead of national elections, not least from trade unions fearing a jobs cull.
Commerzbank is entering discussions to fulfil its duty to shareholders, although the bank’s management remains opposed to a takeover by the Italian lender, one of the people said.
The decision to have Orlopp lead the talks could come as early as Tuesday, when Commerzbank’s supervisory board and management begin two days of meetings near Frankfurt to discuss the group’s strategy and response to UniCredit, the people said.
Commerzbank declined to comment.
The bank’s chief executive Manfred Knof announced he would step down as CEO at the end of 2025 just hours before UniCredit revealed its stake, raising questions about whether he was best placed to lead talks. He has snubbed overtures for a takeover.
Commerzbank, with more than 25,000 business customers, almost a third of German foreign trade payments and more than 42,000 staff, is a linchpin of the German economy.
The Italian takeover interest has already prompted a backlash and is an embarrassment for the German government, which appeared to have sold part of its stake without realising that UniCredit would snap it up.
LONG-STANDING INTEREST
UniCredit first approached Berlin to flag its interest in Commerzbank in 2017 and considered a competing bid for the German lender in 2019 when Commerzbank was discussing a tie-up with Deutsche Bank.
In 2022, UniCredit CEO Andrea Orcel approached Knof about a potential deal, before the Ukraine war, people with knowledge of the matter have told Reuters.
Roughly a year ago, UniCredit expressed interest in the government’s stake but Berlin never entered into discussions, one of the sources said. The bank declined to comment.
When Orcel returned this month to snap up the stake, it caught German government officials off guard, several people with knowledge of the matter told Reuters.
One German government official said that the government had not intended to sell the shares to a strategic investor and had expected the stock to be bought by multiple buyers.
Commerzbank immediately urged the government not to sell more of its remaining 12% stake, one of the people said.
That person said any takeover could undermine the flow of credit to German companies by preoccupying the bank in complex merger talks as well as exposing Germany to debt risks in Italy.
GERMAN CONUNDRUM
Orlopp, Commerzbank’s deputy CEO and one of Germany’s highest profile bankers, this week said the government should hold on to its remaining stake.
“We have all been very surprised by the process,” Orlopp told journalists in Berlin. “That’s why the most important thing now is simply to sort it out calmly, to think about what’s on the table now and how to deal with it.”
Orlopp assumed her current role in 2020 during a tumultuous period for the bank – when the U.S. investor Cerberus, a major shareholder at the time, revolted and pressed for changes in the bank’s strategy and management.
In UniCredit’s home market of Italy, the government views favourably the bank’s efforts to build a large European group through a merger with Commerzbank as long as the Milanese bank keeps its central functions in Italy, sources close to the matter said.
Orcel walked away from buying Monte dei Paschi at the eleventh hour in 2021, forcing the government to seek more time from the EU to return the bank to private investors, hurting relations with the bank.
The discussions about a takeover are unfolding at a delicate time for Germany. The coalition government, one of the most unpopular in recent history, is preparing for national elections next year.
Strong recent gains for the right-wing Alternative for Germany (AfD) and the left-wing BSW are squeezing the three-party government.
That pressure is strongest on the smallest member of that coalition, the liberal FDP party, which runs the finance ministry, responsible for the stake sale.