The European Central Bank is poised to give Italy’s UniCredit the green light to build up its stake in German rival Commerzbank, a person familiar with the matter told Reuters, a move that could pave the way for Europe’s biggest cross-border banking deal since the global financial crisis.
ECB staff are likely to complete their analysis of UniCredit’s purchase of 29.9% of Commerzbank by early March, setting the stage for approval by the regulator’s Supervisory Board later in the month, the source said.
The most recent briefing from the ECB’s supervisory experts, which included different scenarios to evaluate the banks’ solidity, was positive, the source added.
Spokespeople for the ECB, Commerzbank and UniCredit declined to comment. Shares in the German bank rose after Reuters’ report to end the day up 1.6% at a 13-1/2 year closing high of 20.56 euros.
UniCredit CEO Andrea Orcel, a prolific dealmaker, shocked Germany’s corporate and political establishment by snapping up shares in Commerzbank in September.
He went on to build up the holding in the face of widespread German opposition while pressing for a full tie-up.
The ECB signing off on UniCredit owning just shy of 30% in Commerzbank would clear a significant regulatory hurdle.
‘HOSTILE’ DEAL
Orcel has signalled the need for support from the German government for a full takeover to proceed, a move Commerzbank’s own management has called “hostile”.
A combination of UniCredit and Commerzbank would see one of Italy’s biggest banks take over Germany’s No.2 publicly traded lender, which remains partly state-owned since a 2008 bailout.
The lack of a common deposit protection scheme and hurdles to the movement of capital have been cited by executives and supervisors as a major impediment to banking dealmaking in the region.
But the ECB’s top supervisor Claudia Buch and its President Christine Lagarde have both made the case for cross-border banking mergers, arguing European lenders are too small and domestically focused to compete with their U.S. peers.
As the euro zone’s chief banking watchdog, the ECB can stop large investments in banks based on a handful of criteria such as the financial strength of the buyer and the reputation of the managers.
The supervisors’ decision needs to be rubber-stamped by the ECB’s Governing Council, presided over by Lagarde.
Politicians in Berlin fear losing one of Germany’s few remaining big commercial banks as well as tying their country’s fortunes to those of debt-laden Italy.
Germany’s next government will likely be led by conservative Friedrich Merz. In September, he described UniCredit’s takeover attempt as “really devastating” for Germany and warned about “a significant impact” on medium-sized businesses and export financing that rely heavily on bank lending.
Commerzbank said earlier this month it planned to axe 3,900 mostly local jobs to help it deliver more ambitious profit targets as part of new chief executive Bettina Orlopp’s strategy for fending off UniCredit’s advances.
(Additional reporting by Tom Sims and Valentina Za）
