- Chancellor Olaf Scholz opposes the takeover and warns UniCredit.
- Economist Monika Schnitzer downplays job loss concerns from a merger.
- UniCredit aims to raise its stake to 29.9%, just below the public takeover threshold.
- The German government holds a 12% stake and will not sell more shares for now.
European Central Bank (ECB) President Christine Lagarde expressed support for cross-border bank mergers during a recent hearing with the European Parliament. She emphasized the need for banks that can compete globally, stating, “Cross-border mergers between banks that can actually compete at the scale, depth, and range with other institutions around the world, including American and Chinese banks, is, in my view, desirable.”
This statement comes as UniCredit has unexpectedly built a stake in Commerzbank, amounting to approximately 21 percent since early September, sparking speculation about a potential takeover. The move has raised concerns among German unions and politicians, who fear that such an acquisition could result in job losses and reduce lending to the country’s small and midsize businesses.
European policymakers have long advocated for greater integration of eurozone financial markets, which includes the consolidation of the banking sector. They argue that creating larger financial institutions is essential for enhancing competitiveness on the international stage.
While Lagarde was hesitant to comment on specific cases, such as a merger between UniCredit and Commerzbank, she articulated her general stance on the matter. She pointed out that smaller banks with low profitability and limited scale face significant competitive disadvantages.
Lagarde acknowledged the potential risks associated with bank mergers, emphasizing the need for careful consideration of these factors. She reassured the Parliament that the ECB would thoroughly review any merger proposals, highlighting the central bank’s commitment to maintaining stability within the financial sector.
In the eurozone, the European Central Bank’s (ECB) Single Supervisory Mechanism will review UniCredit’s adherence to banking regulations following its swift acquisition of a stake in Commerzbank. Italy’s second-largest bank is seeking ECB approval to increase its ownership to 29.9 percent, just shy of the 30 percent threshold that would necessitate a public offer for the entire bank.
German Chancellor Olaf Scholz has expressed opposition to any potential takeover, cautioning UniCredit against “unfriendly” actions. His comments come amid rising tensions regarding the Italian lender’s growing influence in Germany’s banking sector.
Prior to Lagarde’s remarks, Monika Schnitzer, an economist and chair of a panel advising Scholz’s government, described the arguments against a merger as “unconvincing.” She noted that there should be no inherent objection to a German bank being acquired by a foreign entity, emphasizing that “in principle, there is no objection.”
Schnitzer dismissed concerns regarding job losses and diminished financing for German small and medium-sized enterprises (SMEs), arguing that increased productivity is essential for international competitiveness. She pointed out that a foreign bank, like UniCredit, would still have an interest in granting loans to maintain its business operations.
In response to the looming threat of a takeover, Commerzbank has vowed to resist any acquisition attempts. The German government has pledged its support for the bank’s strategy to remain independent and competitive in the market.
Last week, Commerzbank raised its profit forecasts and announced plans to enhance shareholder rewards, aiming to bolster its share price and make any takeover more financially burdensome for potential buyers.
The German government currently retains a 12 percent stake in Commerzbank, having sold a 4.5 percent block of shares earlier this month that was purchased by UniCredit. Berlin has indicated that it will not sell any further shares for the foreseeable future, reflecting its commitment to supporting the bank’s independence.
