UniCredit lifts Commerzbank exposure to 28% #ItalyFinance

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UniCredit has gained control of about 28 per cent of Commerzbank’s voting rights, as the Italian lender escalated its pursuit of the German bank at the same time as going after domestic rival Banco BPM.

The Italian bank said on Wednesday it had entered into new financial instruments relating to Commerzbank shares, after rapidly building a 21 per cent interest in the German lender in September.

UniCredit holds 9.5 per cent of its stake in Commerzbank directly, but has been hamstrung by rules that prevent it from increasing its holding beyond 9.9 per cent without consent from European regulators.

UniCredit also said on Wednesday it had now “activated” the formal approval process, meaning a decision on whether the Italian bank can lift its direct share ownership above the 10 per cent threshold is due within 90 days.

One person familiar with the details told the Financial Times that a decision, which could pave the way for the Italian bank’s chief executive Andrea Orcel to convert the derivatives holdings into shares, would be taken by “mid-March”.

As an EU-regulated bank with a sound balance sheet, approval should be a formality, according to people familiar with the process.

A UniCredit spokesperson said “the clock has started ticking” but declined to comment further. The ECB and Germany’s financial watchdog, BaFin, declined to comment.

The lender’s latest stake-building underlines Orcel’s ambition to continue pursuing Commerzbank — and potentially a deal to create a European banking champion — despite facing fierce resistance from the German establishment and an increasingly complicated situation in his domestic market, where UniCredit last month launched a €10.1bn bid for BPM.

UniCredit said its latest move on Commerzbank “does not have any impact” on its offer for BPM, which has rebuffed its larger rival’s offer. The move was in line with its previously stated ambition to increase its holding in the German lender to 29.9 per cent, it said.

The Italian lender added that the increase in its exposure to Commerzbank — while hedged — “reinforces” its view that “substantial value exists within Commerzbank that needs to be crystallised”.

Hardening political opposition in Germany, ahead of crunch elections early next year, had been seen as weakening the likelihood of any deal for Commerzbank.

German finance minister Jörg Kukies said in November that he expected Orcel to abandon the approach because of Germany’s “very critical stance”, even though UniCredit already has a presence in Germany through its HypoVereinsbank subsidiary.

Commerzbank said it had “taken note” of UniCredit’s announcement but would not comment further.

UniCredit also faces domestic political opposition to its proposed Italian deal.

BPM on Tuesday urged Italy’s financial regulator, Consob, to investigate UniCredit’s takeover bid, according to people with knowledge of the request, claiming it did not respect certain rules.

BPM has claimed that UniCredit’s offer fails to correctly reflect its value and is merely aimed at blocking its takeover of asset manager Anima.

Under Italy’s so called passivity rule target companies are stopped from taking action that could affect the outcome of a live takeover bid for six months.

BPM cannot therefore amend the terms of its offer for Anima, to the “detriment” of its shareholders, the people said.