UniCredit Increases Stake in Commerzbank to 20%

UniCredit doubles its equity stake in Commerzbank to 20%. The deal marks a significant milestone in the German bank's history and demonstrates UniCredit's commitment to expanding its presence in the European market. Commerzbank is one of Germany's leading banking groups, with a net banking product of EUR 440.5 billion in current credits and EUR 310.9 billion in current deposits. The acquisition is expected to strengthen UniCredit's position in the European banking sector.

UniCredit has doubled its equity stake in Commerzbank, marking a significant milestone in the German bank's history and demonstrating UniCredit's commitment to expanding its presence in the European market. This strategic move positions UniCredit to strengthen its standing in the European banking sector.

Commerzbank, one of Germany's leading banking groups, boasts a net banking product of EUR 440.5 billion in current credits and EUR 310.9 billion in current deposits. The acquisition is expected to enhance UniCredit's market position and create synergies that could boost profitability.

The journey towards this equity stake began with UniCredit converting its 18.5% stake held via derivatives into physical shares by the June 2025 deadline, thus avoiding triggering Germany's mandatory takeover rules. The European Central Bank (ECB) approved the stake increase to 29.9%, citing UniCredit's strong capital position [1].

However, the German Federal Cartel Office's antitrust review, expected by July 2025, remains a critical unknown. The approval hinges on the assessment of competition in SME lending and export finance, where Commerzbank and UniCredit's German subsidiary HVB overlap. If rejected, UniCredit faces a choice: abandon its stake or pursue a costly full takeover bid [1].

UniCredit's 20% stake represents a strategic hedge, not a full commitment. CEO Andrea Orcel has emphasized the bank's "optionality" to proceed only if strict financial criteria are met. The merger's touted benefits—€800M in annual synergies, a €1.3T asset powerhouse—remain contingent on regulatory and political alignment [1].

For investors, the stakes are high. While the merger could create Europe's third-largest bank by assets, political and antitrust hurdles loom large. Commerzbank's shares have surged 90% since 2024 on merger speculation, trading at 1.5x price-to-book (P/B), while UniCredit languishes at 0.6x—a stark gap reflecting market skepticism over the merger's execution [1].

Germany's government has been a consistent thorn in UniCredit's side. Chancellor Friedrich Merz has labeled the stake-building a "hostile attack," while Finance Minister Lars Klingbeil insists any bid must be "coordinated with management." The government's 12% stake in Commerzbank further complicates matters, as officials fear foreign control over a pillar of German SME financing [1].

The ECB's conditional support adds another layer. While it approved the 29.9% stake, UniCredit must maintain capital ratios above 14% and adhere to "prudential requirements," a constraint that could limit its flexibility in a stressed environment [1].

UniCredit's broader risks include its parallel pursuit of Banco BPM in Italy and lingering exposure to frozen Russian assets (€462M in losses) [1]. The fate of the Banco BPM deal hinges on two critical dates in July 2025: the July 9 court ruling on Italy's "golden power" regulatory demands and the July 23 tender deadline for Banco BPM shares [2].

For now, the merger's success hinges on regulators and politicians—making this a story to monitor closely, but not one to bet heavily on until the final regulatory hurdle is cleared.

References:
[1] https://www.ainvest.com/news/unicredit-20-stake-commerzbank-strategic-opportunity-regulatory-hurdle-2507/
[2] https://www.ainvest.com/news/unicredit-banco-bpm-deal-navigating-regulatory-crossroads-reward-potential-2507/