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One of Germany’s largest asset managers has urged Commerzbank to enter talks with UniCredit with an open mind, as the government acknowledged it would not be able to block a takeover despite mounting political opposition.
Alexandra Annecke, an asset manager at top-15 shareholder Union Investment, said “a co-operation with UniCredit — in whatever shape and form — does not have to be to Commerzbank’s detriment. Hence we are expecting the willingness to have an open and unbiased dialogue.”
Andreas Thomae, a strategist at top-20 shareholder Deka Investment added that incoming chief executive Bettina Orlopp needed to show “skilful leadership in negotiation with UniCredit”.
The comments come after UniCredit on Monday disclosed it had taken a position in Commerzbank shares which, if approved by the European Central Bank, would make it the German lender’s biggest shareholder ahead of the government.
Domestic opposition to a potential takeover is strong and growing, however. On Wednesday, German finance minister Christian Lindner criticised UniCredit over its stakebuilding, saying the way it built up its holding undermined Berlin’s trust in the Italian bank.
“In terms of their style and their communication, UniCredit’s actions didn’t contribute to strengthening the trust of the government, other market participants and Commerzbank’s employees [in the Italian bank],” Lindner told lawmakers during a Q&A session in the German parliament.
But the German government has made clear it had no way to stop a potential takeover. That, said Steffen Hebestreit, spokesman for chancellor Olaf Scholz, was a “matter for the capital market actors”.
Lindner acknowledged to MPs that it was “up to Commerzbank’s management and supervisory council” to fend off UniCredit’s approach. On Tuesday night, Commerzbank announced that Orlopp, its chief financial officer, would replace Manfred Knof as chief executive “in the near future”.
People familiar with Orlopp’s thinking told the Financial Times she was not supportive of a tie-up with UniCredit and was expected to fight any attempted takeover.
UniCredit’s chief executive Andrea Orcel said on Wednesday that “all scenarios are open” for its stake in Commerzbank, including a takeover.
Lindner told MPs that while the government had suspended further sales of its shares in Commerzbank, when it resumed the sales process it would have little say over who bought the rest of its stake in the bank.
“It’s clear that, if the government sells any more shares [in Commerzbank]the procedure must be non-discriminatory,” Lindner said. “In addition, Commerzbank is a listed company and anyone who wants to can buy shares in it.”
Orcel said on Wednesday that UniCredit had three options on Commerzbank: continue as a significant investor, merge it with UniCredit’s German subsidiary HypoVereinsbank, or sell its stake and return the capital to shareholders.
For now, he said that UniCredit should be viewed as an investor and would not be seeking a seat on the board of its rival.
“I usually do not believe in investors having board seats,” he said at a Bank of America conference. “And in this specific case, I think it’s inappropriate for us to have a board seat because we are also a competitor.”
Investors appear to be more supportive of a deal than German politicians.
In a Citigroup poll of institutional clients conducted on Monday, 63 per cent
said they viewed a tie-up between UniCredit and Commerzbank as the most likely outcome while another 27 per cent expected the German lender to merge either with Deutsche Bank or with another rival.
Only 10 per cent of investors said they believed the German lender would remain independent.
In a note to clients, Citi analysts wrote that based on “our conversations with the market”, UniCredit was expected to offer a premium of about 10
per cent over the current market capitalisation of roughly €18bn, adding that as a standalone company, it believed it was only worth €14bn.