Germany Halts Commerzbank Share Sales to Block Any UniCredit Bid

Germany won’t sell any more shares in Commerzbank AG, a move that demonstrates the depth of opposition in Berlin to any takeover by Italian rival UniCredit SpA.

The government “will not, until further notice, sell any additional shares,” the agency responsible for any sales said in a statement Friday. “This also includes sales related to any share buybacks.” 

The decision comes after UniCredit Chief Executive Officer Andrea Orcel bought a 4.5% stake from the government this month and disclosed an overall holding of 9%. His bank had quietly acquired the balance in the market as speculation of a possible sale by Berlin mounted.

That made UniCredit the second-largest shareholder after the German government, which retains 12%. Orcel subsequently said he’s considering a full takeover. Some officials in Berlin were apparently caught off-guard, having expected institutional investors to each buy small amounts.

The lack of transparency around UniCredit’s approach has irked German officials, a person familiar with the matter said, asking not to be identified discussing government deliberations. Orcel has said at least some in Berlin were aware of his bank’s intentions and has emphasized in recent days that he’s not interested in pursuing a hostile takeover even as he seeks regulatory permission to build a stake of as much as 30%. 

Friday’s statement made it clear the government wants to see Germany’s second-largest listed lender remain independent. Commerzbank “is a stable and profitable institute,” the German government said. “The bank’s strategy is geared toward independence.”

It’s a position that will please the bank’s influential labor representatives, who have said they are “bitterly determined” to prevent a merger with UniCredit, warning that two-thirds of the jobs at Commerzbank could be cut in a takeover. 

The announcement, while a setback, may not spark an immediate reaction from UniCredit. CEO Orcel, a veteran dealmaker, has made repeatedly clear that UniCredit remains open-minded with regard to what happens next to its stake. 

“We may go up, we may go down, and we may combine,” Orcel said in a Bloomberg TV interview last week. “We are very patient.”

Representatives for the banks declined to comment. A German spokesperson declined to comment any further beyond the written statement

The German government’s initial reactions to UniCredit’s move signaled diverging views within the country’s three-way ruling coalition.

Finance Minister Christian Lindner of the business-friendly Free Democrats on Thursday defended the sale last week, arguing it was the right time to begin the process of exiting the lender. He repeatedly stressed that it’s not the government’s role to create national champions. However, officials at the Berlin chancellery working for Olaf Scholz, a Social Democrat, seemed more reserved and opened an internal investigation into how the sale played out.

“We are now conducting a thorough analysis of events and the sale of the stake to UniCredit and then will further analyze the situation,” Steffen Hebestreit, Scholz’s chief spokesman, said Friday at the regular government news conference in Berlin, confirming an earlier Bloomberg report.

If Berlin doesn’t soften its stance, its 12% stake and antipathy would effectively kill off the possibility of an Orcel-orchestrated takeover, underlining the difficulties facing bank mergers in a European market that remains highly fragmented.

National interests and regulatory obstacles have long prevented cross-border bank deals, where jobs and national pride is at stake.

With assistance from Mark Schroers, Sonia Sirletti, Zoe Schneeweiss and Michael Nienaber.

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