Mega-merger ahead? Commerzbank opens negotiation door to UniCredit

Commerzbank has confirmed it has begun talks with Italy’s UniCredit over a potential takeover, marking a dramatic shift in a two-year battle for control of Germany’s second-largest listed bank as the Italian lender edges closer to securing the deal.

The announcement came alongside stronger-than-expected second-quarter earnings, with Commerzbank reporting a 94% year-on-year jump in net profit to 898 million euro, comfortably beating analysts’ consensus forecast of 845 million euro. The performance was driven by stronger commission income, giving management added momentum as negotiations gathered pace.

Chief executive Bettina Orlopp said discussions had started “in the genuine interest of both UniCredit and Commerzbank,” adding that both lenders were focused on creating value for shareholders, customers and employees.

“We have started talks on this, which is in the genuine interest of both UniCredit and Commerzbank, as we are both determined to create value for our shareholders, clients and employees,” she told the analysts.

“I’m optimistic that, step by step, we can find common ground on governance and also on the business model,” she told analysts, signalling a markedly softer tone after months of resisting UniCredit’s advances.

The change in stance reflects the growing influence of UniCredit, which has built a 48% stake in Commerzbank as part of its 45 billion (USD 52 billion) euro takeover pursuit.

While Orlopp stressed that any transaction would require cooperation with Commerzbank’s management rather than unilateral action, investors interpreted the renewed dialogue as a sign that resistance to a deal is weakening.

The banks are expected to explore potential cost savings, joint investment programs, and governance arrangements as discussions progress. However, strategic differences remain.

UniCredit is reportedly keen for Commerzbank to place greater emphasis on its domestic German business, while Commerzbank continues to view its international corporate lending and trading network as a core competitive strength.

UniCredit chief executive Andrea Orcel has previously said he is prepared to negotiate directly with the German government and Commerzbank employees, and has indicated he could seek an extraordinary shareholder vote to reshape the lender’s supervisory board if required.

As per sources close to the UniCredit, Orlopp and Orcel met on the sidelines of a private event in July, where the duo discussed accounting measures and other steps related to UniCredit’s taking control.

“They discussed the necessary accounting and other steps related to UniCredit’s taking ‌control ⁠and consolidating Commerzbank. It was not the start of any negotiation,” the person said further.

Berlin remains cautious about the proposed combination. Germany’s finance ministry, which still holds a 12 per cent stake in Commerzbank following the bank’s rescue during the global financial crisis, reiterated that the future of the lender should be determined through discussions between the two banks while criticising UniCredit’s “aggressive approach.”

The proposed deal has become one of Europe’s most closely watched banking transactions, highlighting both the challenges and the potential rewards of cross-border consolidation in the eurozone.

If successful, a merger would create one of the region’s largest banking groups and could serve as a blueprint for further European banking consolidation aimed at competing more effectively with larger US rivals.

UniCredit, whose relentless pursuit for Commerzbank was choreographed by a skilful use of derivatives, wants the Frankfurt-based lender to boost its profits further.

The Italian lender wants its roadmap for its German counterpart to be in place ⁠from January 2027 and is ready to call an extraordinary shareholder vote to appoint a new supervisory board at Commerzbank if necessary.

Orlopp, however, has maintained a conciliatory tone in the past couple of weeks, stating that it was in the best interest of both banks to move as quickly as possible and that they would try to identify possible cost savings and whether the banks could join forces on large investment programmes.

A Commerzbank presentation reportedly also showed the company’s increasing willingness to work with UniCredit. Orlopp, however, has said that UniCredit, even with that large stake, needs to work with her management team on a path forward rather than act unilaterally on any structural changes.

“It requires a shared understanding of the business model and the involvement of all stakeholders,” she told the stakeholders and analysts.

A person familiar with UniCredit’s thinking told the Reuters before the results announcement that the Italian suitor was watching to see if Commerzbank shifts focus to Germany and away from international lending and trading, exposing a difference in opinion on strategy.

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Commerzbank has said its international network is key to its strategy.

The German Finance Ministry, ⁠which oversees a 12% stake that the government has held since Commerzbank’s bailout during the global financial crisis, said through a spokesperson that it was up to the two banks to discuss how to proceed and criticised UniCredit’s “aggressive approach.”