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(Bloomberg) — A growing number of German experts are voicing support for a possible acquisition of Commerzbank AG by a rival, potentially adding pressure on the government to soften its stance in response to a recent approach from UniCredit SpA.
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Germany’s banks need to grow to be “reliable partners” for small- and medium-sized companies, said Christoph Ahlhaus, head of the business association Mittelstand. “If, in the case of Commerzbank, a merger with another European bank contributes to this, we welcome it,” he said.
Ahlhaus’ comments echo those of DZ Bank Chief Executive Officer Cornelius Riese as well as Monika Schnitzer and Lars Feld, two prominent economists. They have all said that a takeover by UniCredit of Commerzbank — Germany’s second-largest listed lender — may be beneficial, for example, by boosting the latter’s profitability.
The Italian lender last month rapidly built up a 21% stake in Commerzbank, largely through derivatives. UniCredit’s Chief Executive Officer Andrea Orcel has said a full takeover is an option, potentially creating Germany’s largest lender. He has billed his approach as a “test case” for how integrated the European Union’s financial services industry has become. He has also said the EU needs bigger banks if it wants sufficient funding for growth.
The growing chorus of influential German voices now lending at least tentative support to Orcel follows strong opposition from Berlin to a potential deal. One reason the German government has come out against it is Commerzbank’s perceived role in funding the domestic economy. Berlin has also criticized the way UniCredit acquired the stake.
Several labor unions representing Commerzbank staff have also announced they will do what they can to stop any attempt by UniCredit to buy the firm. As much as two-thirds of Commerzbank jobs are at risk if the deal were to happen, one has said.
Other German businesspeople have also said they’d prefer Commerzbank to remain independent. The German banking industry shouldn’t consolidate more, Marie-Christine Ostermann, who heads the business association Familienunternehmer said on LinkedIn.
The Italian lender’s creditworthiness would likely improve through a deal by increasing its international diversification and adding more funding channels, Moody’s analysts Fabio Ianno and Maria Jose Mori said in a note on Tuesday.
Moody’s also affirmed Commerzbank’s credit ratings, saying “while the timing and implications of a further build up in UniCredit’s ownership and a subsequent potential takeover bid are uncertain at this stage, we do not expect it to undermine Commerzbank’s financial strength and profile.”
Competitor S&P Global Ratings took a different view last week saying that “the ratings on Commerzbank could come under pressure” in case of an acquisition given its ratings are currently stronger than UniCredit’s.
Some of the German experts signaled agreement with Orcel’s views on EU integration.
“The European financial market is too little integrated and German banks in particular aren’t competitive enough,” economist Schnitzer said in a tweet last month. “Consolidation and increasing productivity are necessary.”
–With assistance from Nicholas Comfort.
(Updates with lobby comment in seventh paragraph and S&P comment in tenth.)
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