There are those who buy, those who sell, and those who hold back. Berlin has chosen the third way, although it is not at all a surprise. The German government has officially rejected the purchase offer made by Unicredit to take over Commerzbank, the second largest private German bank, reaffirming its support for the independence strategy of the Frankfurt-based credit institution.
A clear stance, expressed by the Federal Finance Agency (Bundesfinanzagentur), which stated that accepting the offer was “already economically out of the question”: the price proposed by Unicredit does not include any adequate premium compared to the current stock market quotations of Commerzbank shares.
THE ISSUE OF THE STATE SHARE
The federal government is the second largest shareholder of Commerzbank, with a stake of about 12 percent, a legacy of the public bailout during the 2008 financial crisis. From this position, Berlin reiterated its opposition to the acquisition, rejecting what it immediately defined as the “aggressive approach” of the Milanese group. The official statement, reports the Handelsblatt, emphasizes that Commerzbank “plays an important role in financing the German economy and small and medium-sized enterprises” and that, “as an important employer, it is fundamental for the Frankfurt financial center.” Both of these functions, the Bundesfinanzagentur’s statement reads, “must be guaranteed in the future as well.”
THE HANDELSBLATT RECONSTRUCTION
Unicredit had presented a voluntary offer in May, structured not in cash but in its own shares. The German economic daily writes that, according to available information, the Italian bank would be transferred about 11 percent of all Commerzbank shares. If the operation goes through, Unicredit’s total stake would mathematically rise to about 38 percent. To this, the Handelsblatt also notes that the institution has already secured over 3 percent of the capital through purchase options, also holding additional derivative financial instruments. The original deadline for the offer expires this Tuesday, “but according to leaked information it should be extended until July 3, leaving the matter still open.”
THE CLASH INTENSIFIES
The clash has meanwhile intensified on the corporate relations front, the Düsseldorf daily reconstructs, highlighting how just yesterday Unicredit threatened, if it obtained sufficient support at the shareholders’ meeting, to proceed with the replacement of Commerzbank’s supervisory board and management board. The response from the latter was not long in coming: the bank involved the financial supervisory authority Bundesanstalt für Finanzdienstleistungsaufsicht (Bafin), accusing Unicredit of resorting to shares mainly from banks with which it has commercial relations through derivative instruments, rather than from independent shareholders. For the latter, an offer structured at a price below the market quotation would translate into a direct loss.
Unicredit firmly rejected such criticisms. The battle for control of one of the main German institutions is therefore still open and Berlin, government included, seems for now to have no intention of giving in.
