UniCredit Raises Commerzbank Holding to Around 21% — Update

By Elena Vardon

Italy's UniCredit increased its holding in Commerzbank to around 21%, pending regulatory approval, in a move that could pit it against resistance in Germany.

UniCredit entered into financial instruments for a 11.5% stake in the German lender, it said Monday. Earlier this month, UniCredit disclosed a 9% stake in its peer, reviving speculation that it could pursue a tie-up of the two banks.

The stake increase brings UniCredit closer to the 30% threshold at which it would have to launch a mandatory takeover offer and comes shortly after the German government decided it wouldn't sell any more shares in Commerzbank.

While the European Central Bank has long endorsed cross-border consolidation, deals have been few over the past years, with the recent exception of UBS's state-supported takeover of Credit Suisse. Former ECB President Mario Draghi said in a recent report that Europe needs some large banks spanning the continent, to fuel industry and better compete with the U.S. and China.

UniCredit said it had submitted a regulatory filing to be allowed to hold a stake in Commerzbank of up to 29.9%. The settlement under the new financial instruments will only happen after it gets the necessary approvals, UniCredit said.

The move comes after the German Finance Agency said late Friday that it wouldn't sell any additional shares in Commerzbank until further notice, marking a U-turn for the government, which recently said it wanted to start the process to exit the stake in Commerzbank it built during the financial crisis of 2008. The agency said Commerzbank's strategy was geared toward independence.

German union Verdi has voiced its opposition to a possible takeover of Commerzbank by UniCredit.

Shares in Commerzbank dropped at market open as investors interpreted the government's statement as an endorsement of the lender's independence. The stock recovered some of the losses, and briefly entered positive territory, when UniCredit disclosed the stake increase, trading slightly down in afternoon trade in Europe. UniCredit's shares were down around 2% at the same time.

Whether UniCredit keeps the shareholding, sells it or raises it further will depend on engagement with Commerzbank's management and supervisory boards and other stakeholders in Germany, UniCredit said.

"UniCredit believes that there is substantial value that can be unlocked within Commerzbank, either stand-alone or within UniCredit, for the benefit of Germany and the bank's wider stakeholders," the bank said.

Write to Elena Vardon at elena.vardon@wsj.com

(END) Dow Jones Newswires

September 23, 2024 08:05 ET (12:05 GMT)

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