Germany Ponders Last-Ditch Plan to Thwart Italian Bid for Commerzbank

Reflecto News | European Banking & Finance | M&A

FRANKFURT — As UniCredit prepares to formally take over Germany’s second-largest private bank, some members of the German government are examining a drastic step to fend off the unwanted Italian bidder: using state-owned bank KfW to increase Berlin’s existing stake in Commerzbank, people involved in the matter told Reuters.

Germany already owns 12% of Commerzbank after a bailout during the financial crisis two decades ago. By increasing that stake — potentially to a blocking minority of 25% — Berlin could hinder a full takeover of a lender it considers strategic to the nation’s economy, particularly as the financier of the Mittelstand, the small and medium-sized enterprises that form the backbone of Europe’s largest economy.

🇪🇺 The Cross-Border Battle

The acrimonious battle for ownership of Commerzbank has reached a critical juncture after UniCredit CEO Andrea Orcel formally launched a €37 billion ($43 billion) all-share takeover offer. Orcel has been pursuing Commerzbank since 2024, building up a nearly 30% stake through derivatives and direct holdings, and is now pushing to cross the 30% threshold that would allow him to add to his position through open market purchases next year.

The Italian bank argues that Commerzbank has not been living up to its potential and that Europe would benefit from bigger banks in a world of chaotic geopolitics. UniCredit has also unveiled a comprehensive turnaround strategy for the German lender, criticizing Commerzbank’s current “Momentum” strategy as relying on “aggressive” risky non-core bets in international markets.

🛡️ Germany’s ‘Last Resort’: The KfW Option

Some in Berlin are considering whether to use KfW (Kreditanstalt für Wiederaufbau), the state-owned development bank, to increase the government’s current 12% stake. Such a step would require finding several billion euros at a time when Germany is tightening its belt financially.

“It should be viewed as a last resort if all other options fail,” said Armand Zorn, an influential member of the Social Democratic Party (SPD) that now controls Germany’s finance ministry. “The impact would go far beyond the symbolic,” said the vice chair of the SPD’s faction in the German Bundestag.

However, such a move is not a foregone conclusion.

• Political Hurdles: It is unclear if the free-market, pro-business Christian Democrats (CDU), who govern in an uneasy coalition with the more left-leaning SPD, would back it.
• Financial Constraints: More than doubling the government’s stake to reach a 25% blocking minority on the open market could cost at least €4.5 billion and may not stop Orcel.
• Strategic Importance: Supporters argue the move could be justified by Commerzbank’s role as a financier of the German backbone economy.

🏛️ Commerzbank’s Resistance

Commerzbank’s management and workers are pushing back hard against the Italian advance and have the unwavering support of the federal government.

• Corporate Opposition: Commerzbank formally rejects UniCredit’s “hostile tactics and misleading characterizations, which undermine the fundamental trust essential to the banking business and the interests of all stakeholders”.
• Worker Anger: More than 3,000 people are following a WhatsApp chat by Commerzbank’s workers’ council opposing a tie-up. A recent post showed a cartoon Trojan horse filled with UniCredit soldiers carrying spears and shields, with a caption that read: “Andrea Orcel can’t be trusted”.
• Customer Revolt: Some long-time Commerzbank corporate customers are also speaking out and threatening to jump ship if UniCredit succeeds. “I see a takeover very critically and don’t see any benefits,” said Juergen Lindhorst, chair of Lindhorst Group with 4,000 employees.

Commerzbank is set to publish an updated strategy on Friday that its managers hope will convince investors of the value of its independence. The bank will announce cost cuts that will likely include plans to shave staff in what would be a third round of cuts this decade.

📉 A Test of German Resolve

After bickering ministers failed to deliver on promises of economic reform and Germany’s economy has ground to a virtual standstill, losing Commerzbank would be a further blow to Berlin’s standing. Germany also faces significant external threats, including tariffs on trade with the U.S. and a China that has turned from a cheap producer to a rival for some of its most prized industries.

“There will be no deal if the federal government takes a very clear stance,” said Michael Wisser, CEO of WISAG, a facilities management firm with 60,000 employees and a customer of both banks.

📊 Key Financial Points at a Glance

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