UniCredit Takes Stake in Commerzbank

FRANKFURT (Reuters) – UniCredit, Italy’s second-largest bank, has acquired a 9% stake in Germany’s Commerzbank and aims to potentially increase this to 29.9%, with sources indicating openness to a full takeover.

To surpass a 10% stake, UniCredit must seek approval from the European Central Bank (ECB), which regulates euro zone banks.

When Does ECB Step In?

The ECB’s approval is necessary when a shareholder seeks to acquire 10% or more in a supervised lender, with additional thresholds at 20%, 30%, and 50%. Buyers may apply for any stake, potentially bypassing intermediate reviews if already cleared for a larger share.

What Does the ECB Examine?

UniCredit needs to present its goals for the acquisition, which the ECB will evaluate. The assessment includes:
– The buyer’s reputation
– Proposed board member quality
– Financial health of the buyer
– Target’s ability to meet supervisory standards

The ECB primarily assesses whether UniCredit can afford the acquisition while remaining financially stable and if it will create a stronger entity.

Will the ECB Support a Merger?

The ECB’s stance on potential support depends on UniCredit’s objectives. Nonetheless, ECB officials have noted the benefits of cross-border mergers, given the inefficiencies and high costs associated with euro zone banks. ECB President Christine Lagarde expressed interest in the unfolding merger process.

Bundesbank chief Joachim Nagel emphasized the need for robust banks to support corporate futures while outlining requirements for merger support.

What Do Previous Mergers Indicate?

The ECB recently approved BBVA’s €12 billion bid to acquire Sabadell, which was later blocked by the Spanish government. Securing ECB approval may not be UniCredit’s most significant challenge, as a Commerzbank takeover involves political implications for Germany, Europe’s largest economy.

How Long Is the Process?

The ECB has 60 days to approve a request, extendable by an additional 30 days. The decision process typically consumes most of that timeframe, suggesting delays are likely.

Who Makes the Decision?

The ECB supervisory board, composed of representatives from euro zone members, must endorse any deal before the Governing Council also reviews it under a non-objection procedure.