A comment war has started between UniCredit CEO Andrea Orcel and his Commerzbank counterpart, Bettina Orlopp, after Germany officially rejected the Italian venture’s takeover offer for the Frankfurt-based venture.
While the Friedrich Merz administration cited factors like a low price and concerns about the Italian bank’s “aggressive approach,” behind its rejection of the UniCredit’s proposal, Orcel, on June 18, ended up criticizing Germany’s banking sector.
“Germany is the market in Europe where customers are the least satisfied. Some 27% of Germans don’t like the services that banks give. It is the market with the highest penetration of fintechs and where American banks are gaining the most market share from the top down,” Orcel said during a business conference in Rome.
UniCredit, on June 15, accused Commerzbank of “misleading the public” over the merger talks. Hitting back at this, Orlopp said on the same day, “We have, of course, simply presented the facts, and we will continue to do so, because we are the only ones who actually have access to them.”
The main bone of contention here has been the fact that UniCredit’s all-share offer comes with a discount that allegedly undervalues the German bank’s shares. As per Commerzbank, none of UniCredit’s institutional investors have tendered their shares. While reaching out to BaFin, Germany’s Federal Financial Supervisory Authority, with the request of investigating UniCredit’s take-up data, Commerzbank stated that the shares came from banks which, in most cases, are counterparties of UniCredit, which reportedly holds derivatives with Nomura, Citi, and BNP Paribas.
“Suggestions that the actual number of tendered shares is lower because these shares have been borrowed from UniCredit are false and without foundation. We have been compelled to clarify our position to set the record straight because of the continued and relentless dissemination of inaccurate and misleading information, which was interfering with the offer process,” the Italian bank said in a statement, while attacking Commerzbank.
After saying its goal was to lift its stake just above 30%, UniCredit has so far secured around 40% of Commerzbank, enough to give the Italian venture control of shareholder resolutions at meetings. Despite that, UniCredit skipped Commerzbank’s last annual general meeting, stating that should it secure sufficient support at a future AGM, it would be in a position to appoint all shareholder representatives on the supervisory board.
“This would have responsibility for appointing the management board,” UniCredit said, adding that the move would have allowed it to implement a profit-boosting strategy it had previously promised for Commerzbank.
As of June 15, UniCredit’s take-up stood at 11.91% of Commerzbank’s capital, giving the Italian venture an overall holding of 41.9%, including a 26.77% equity stake it had previously built and another 3.22% in share-settled derivatives. UniCredit also holds 13.19% of Commerzbank in cash-settled derivatives.
With both banks digging in their heels in the months-long battle for control of one of Germany’s most important lenders, BaFin’s entry onto the battlefield has now made things complicated. Post-2008 global financial crisis, the German government started holding stakes in Commerzbank. While the ratio stands at 12% currently, the federal administration has been a vocal critique of UniCredit’s tie-up attempts.
“Accepting the offer was already not an option from a financial point of view, as it does not include an appropriate premium on the current share price of Commerzbank’s shares,” BaFin said.
Despite Berlin’s opposition, UniCredit could still win control of the German bank. However, the Merz administration’s 12% stake gives it seats on Commerzbank’s supervisory board, which appoints management and helps oversee its strategy.
BaFin, which also manages the government’s holdings, further supported Commerzbank’s independence, noting that the bank played a critical role in financing medium-sized Mittelstand companies and was an integral player in Frankfurt, the European nation’s financial hub.
Frankfurt prosecutors, on the other hand, have reportedly begun a preliminary investigation into possible market manipulation related to UniCredit’s offer. In response, UniCredit said that it was aware of the matter and that the prosecutors’ response was “in line with protocol when such complaints are filed.”