By John O’Donnell and Tom Sims
FRANKFURT (Reuters) – Commerzbank is set to put Chief Financial Officer Bettina Urlaub at the head of talks with UniCredit when the German lender’s supervisory board meets next week as the Italian rival eyes a takeover, two people familiar with the matter said.
UniCredit recently bought a 9% stake in Commerzbank (ETR:), expressing interest in a merger. A meeting next week is set to pave the way for exploratory talks between the two banks.
The UniCredit takeover represents the most ambitious attempt yet at a European-wide bank merger, but it faces major political hurdles in Germany ahead of national elections, not least from trade unions who fear job cuts.
Commerzbank is in discussions to fulfil its duty to shareholders, one of the people said, even though the bank’s management remains opposed to a takeover by the Italian lender.
The decision on Urlup taking the lead in the talks could come as early as Tuesday, when Commerzbank’s supervisory board and management begin two days of meetings near Frankfurt to discuss the group’s strategy and response to UniCredit, the people said.
Commerzbank declined to comment.
The bank’s chief executive, Manfred Knof, announced he would step down as CEO at the end of 2025 just hours before UniCredit disclosed its stake, raising questions about whether he was best placed to lead the talks. He has rejected takeover offers.
Serving more than 25,000 business customers, accounting for almost a third of German foreign trade payments and more than 42,000 employees, Commerzbank is a cornerstone of the German economy.
The Italian interest in the takeover has already sparked a backlash, and is an embarrassment for the German government, which appears to have sold part of its stake without realising that UniCredit would take it over.
long term interest
UniCredit first approached Berlin to express interest in Commerzbank in 2017 and considered making a competitive offer for the German lender in 2019 when Commerzbank was discussing a partnership with Deutsche Bank.
In 2022, Andrea Orcel, CEO of UniCredit, approached Knov about a potential deal, before the Ukraine war, people familiar with the matter told Reuters.
UniCredit expressed interest in buying the government stake about a year ago but Berlin has not entered into any discussions, one of the sources said. The bank declined to comment.
Orsel’s return this month to buy the stake surprised German government officials, several people familiar with the matter told Reuters.
A German government official said the government had no intention of selling the shares to a strategic investor, and had expected the shares to be bought by multiple buyers.
Commerzbank immediately urged the government not to sell any more of its remaining 12% stake, one of the people said.
Any acquisition could undermine the flow of credit to German companies by entangled the bank in complex merger talks, as well as expose Germany to debt risks in Italy, the person said.
German puzzle
Urlaub, Commerzbank’s deputy chief executive and one of Germany’s most prominent bankers, said this week that the government should keep its remaining stake.
“We were all surprised by this process. That’s why the most important thing now is simply to resolve this issue calmly, to think about what is on the table now and how to deal with it,” Urlaub told reporters in Berlin.
Orlop took up her current role in 2020 during a turbulent period for the bank – when US investor Cerberus, a major shareholder at the time, revolted and pushed for changes to the bank’s strategy and management.
In Italy, home to UniCredit, the government looks favorably on the bank’s efforts to build a large European group through a merger with Commerzbank as long as the Milanese bank retains its central functions in Italy, sources close to the matter said.
Orcel pulled out of the Monte dei Paschi purchase at the last minute in 2021, forcing the government to ask the European Union for more time to return the bank to private investors, damaging relations with the bank.
The takeover discussions are taking place at a sensitive time for Germany. The coalition government, one of the most unpopular in recent history, is preparing for national elections next year.
Strong recent gains by the right-wing Alternative for Germany (AfD) and the left-wing BSW are putting pressure on the three-party government.
The pressure is most intensely focused on the smallest member of the coalition, the liberal Free Democratic Party, which holds the finance ministry and is responsible for selling the stake.