UniCredit-Commerzbank: amicable merger does not take off, time to think of a plan B

It may be that in the coming weeks the German reception to the merger hypothesis between UniCredit and Commerzbank will change and become more open-minded. For now, it does not seem to be going in that direction. On the contrary, new signs of clear opposition to the opening of 'friendly' negotiations, as UniCredit would like, are emerging every day. The German government, or rather the offices of the Chancellery led by the Social Democrat Olaf Scholz, despite not having official veto powers, continues to raise the barricades against the operation. A choice that is also political and electoral - in Germany votes will be held in September 2025, if not before - which takes into account the clear proclamations against the Italian takeover of Commerz made by the Cdu (leader in the polls to the detriment of the Spd).

The hypothesis of an amicable negotiation put forward by UniCredit was, however, primarily aimed at the top management and stakeholders of Commerzbank. But even on this side, the signs seem anything but encouraging. The former CEO Manfred Knof, who the day before UniCredit's acquisition of the 9% stake had surprisingly announced that he would only remain at the helm of the bank for a year, was urgently replaced after only a few days by former CFO Bettina Orlopp, who had previously always said she was against any kind of aggregation for Commerzbank. It is too early to say whether Orlopp is willing to change her mind and accept the 'friendly' table proposed by UniCredit. From the first moves, it would seem the opposite. First she herself announced an increase in the group's stand-alone profit targets, then yesterday the bank officially declared that at the capital market day in February it will present a stand-alone strategy update. And finally, again yesterday, in an interview with a German newspaper, Orlopp herself stated that Commerzbank is considering acquisitions in order to grow independently, starting with asset management.

Negotiating tactics to raise the price and conditions of a possible aggregation with UniCredit, starting with the coveted legal seat of the combined entity? Or escalation of total barricade signals against the Italian attempt to 'amicably' aggregate Commerz? In the world of investment banking, the second hypothesis is considered the most credible. But the opposition of German banks and politicians does not imply, as a first choice, the retreat of UniCredit. On the contrary. The Italian group, also thanks to purchases booked through derivative instruments, has already potentially risen to 21% of Commerz's capital and enjoys the favour of the institutional investors who own the majority of the German bank's capital.

Also in favour of the aggregation is the ECB Supervision, which has been advocating cross-border mergers for years, as well as a significant part of Bavarian business, which for years has been a client of the German bank (formerly Hvb) owned by UniCredit. And certainly so is the EU Commission, which has been advocating the creation of European champions of finance and industry for years. There are therefore various preconditions for the attempted takeover of Commerz by UniCredit to turn from 'friendly' into something else in the coming weeks. A hostile transaction? The investment bankers of the City of London prefer to speak of an 'unsolicited offer'. Easy to say as long as one manoeuvres within domestic borders, more problematic when the target company is located in another large European country. UniCredit at this stage has the resources to do so, it will have to be seen whether it will also have the courage.