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Senior European policymakers and economists have sharply criticised the German government over its opposition to a takeover of Commerzbank by Italian rival UniCredit, arguing its protectionist approach ran counter to fundamental EU principles.
“Cross-border consolidation of banks should not be seen as a political issue. It is technical issue,” the Bank of Greece governor Yannis Stournaras told the Financial Times. “It shouldn’t matter whether it’s a German bank or an Italian bank. What matters is that it is strong European bank.”
Chancellor Olaf Scholz came out against UniCredit’s move on Commerzbank, Germany’s second-largest listed lender, after the Italian bank announced it had increased its stake in the rival from 9 per cent to 21 per cent, pending regulatory approval.
Days before, the German government had decided to halt any further sales of its remaining 12 per cent stake in Commerzbank after it sold 4.5 per cent in an after-market block trade to UniCredit earlier in September.
“Unfriendly attacks [and] hostile takeovers are not a good thing for banks and that is why the German government has clearly positioned itself,” Scholz said.
Reuters reported last week that the German finance minister Christian Lindner had also shared his concerns about a hostile takeover of Commerzbank with Italy’s Treasury.
Friedrich Merz, leader of the German opposition Christian Democratic Union, said a tie-up of the two banks would be a “disaster for Germany’s banking market”, arguing that the 2005 takeover of Munich-based HypoVereinsbank by UniCredit had resulted in hefty job losses.
But economists and officials in Brussels and other European capitals have argued that Berlin’s opposition to a potential merger flew in the face of German support for capital markets union and the consolidation of the EU’s banking sector.
A former EU commissioner, who talked to the Financial Times on condition of anonymity, said there was a “certain contradiction between the German government’s support for the creation of European champions like Airbus, and its current stance with regard to the UniCredit/Commerzbank situation”.
The person said it was “difficult to argue” against a tie-up of both banks “if the German government is seriously in favour of European integration and the banking union”.
Greece’s Stournaras argued that Europe’s banking sector was weakened by the fact it was “fragmented” along national borders, adding that the superior performance of US banks was mainly driven by their bigger size and the closely integrated home market.
“We need European banking champions that can compete with American competitors, and we need cross-border consolidation to get stronger banks,” he said, adding that UniCredit’s recent acquisition of a 9 per cent stake in Greek Alpha Bank was “welcomed by all quarters” in Greece.
Meanwhile, an Italian cabinet minister told the FT that Berlin’s approach was “hypocritical” in the light of Lufthansa’s recent takeover of ailing Italian national carrier Ita Airways, formerly known as Alitalia, which was approved by Rome.
“Germany has always been pro-EU, they’ve lectured us all for decades about banking union and the single market, on paper we [Meloni’s government] are the nationalists, but when it comes to [Commerzbank] becoming an Italian [competitor’s] target it’s called a hostile act,” the minister said.
Officials in Brussels are similarly exasperated by Germany’s stance. They noted that Scholz made public his opposition to a takeover just days after former ECB president Mario Draghi unveiled a report calling for the EU to complete the capital markets union and advocating mergers to create more resilient companies.
“Literally days after the Draghi report and the start of a fresh push to get capital markets integration moving, Berlin does this and effectively rips everything up,” said a senior EU diplomat.
A spokesperson for the European Commission declined to comment on the issue without “fully assessing” the merger proposal. But, they added: “Restrictions to the fundamental freedoms [of the EU related to movement of capital, people and goods] are only permitted if they are proportionate and are based on legitimate interests . . . Such restrictions cannot be justified on purely economic grounds.”
Some in Germany have also questioned the Scholz government’s approach. The issue revealed that German policymakers lacked a proper understanding of “what a capital markets union and a single market means”, said Stefan Kooths, head of economic research at the Kiel Institute for the World Economy, adding that “companies don’t have passports”.
He said the only public institutions that were entitled to raise objections were banking supervisors and antitrust authorities.
“It’s a debate that unfortunately shows that we here in the EU are not really following the rules of the single market as they were actually intended,” he said.