Italy’s UniCredit ups stake in Commerzbank

By Giovanni Legorano

ROME (AA) – Italian banking giant UniCredit said Wednesday that it has increased its stake in Germany’s bailed-out lender Commerzbank to 28% by entering new derivative contracts, amid a potential acquisition that has been met with political opposition.

The Milan-based bank, Italy’s second largest by assets, now owns 9.5% through a direct stake around 18.5% through derivatives.

“This move reinforces UniCredit’s view that substantial value exists within Commerzbank that needs to be crystalized. It reflects the belief in Germany, its businesses and its communities, and the importance of a strong banking sector in powering Germany’s economic development,” UniCredit said in a statement.

UniCredit is facing a political backlash over its investment plans in Commerzbank, which appear to be in a limbo as Germany heads towards early national elections early next year.

The initial investment by UniCredit – a purchase of shares and derivatives worth 21% of Commerzbank’s capital – created concerns in Germany that key functions and decision-making would shift to Milan after a takeover. In Italy, many worry that to appease Germany, UniCredit could offer to move its central functions there, a possibility UniCredit CEO Andrea Orcel has ruled out.

UniCredit also faces political opposition for the planned acquisition of domestic rival Banco BPM. The Italian government said it will have to review the deal and may resort to using Italian rules which allow it to block acquisition and merger plans if they are deemed to be against the national interest.

“The position remains at this time solely an investment and does not have any impact on the public exchange offer with Banco BPM,” the bank said.