ECB signals it’s open to UniCredit buying Commerzbank

The attempt by Italy’s UniCredit to buy one of Germany’s biggest lenders has received a boost after a top European banking official signalled she was in favour of cross-border deal-making.
Claudia Buch, who chairs the bank supervisory arm of the European Central Bank, said on Friday that consumers and companies “can truly reap the full benefits of the single market” when lenders have operations that span borders.
“For financial institutions, cross-border activities and mergers can provide opportunities to generate economies of scale and scope,” she added.
Her comments are a fillip for Andrea Orcel, the UniCredit boss, who is attempting to reshape the European banking landscape with his ambitious tilt at Commerzbank. The Milan-based group last month built a 21 per cent stake in its Frankfurt-based rival and has said that a full takeover, which would be the biggest cross-border deal in Europe since the 2007-9 financial crisis, is one option on the table. The ECB would have to approve any deal.
Buch said: “From a prudential perspective, the ECB assesses the prudential and governance implications of mergers, using the same criteria for both domestic and cross-border mergers.”
Yet UniCredit faces fierce opposition in Germany, where politicians and trade unions have voiced concerns about the ramifications for the economy if Commerzbank loses its independence. The 154-year-old bank is a big lender to the Mittelstand, the small and medium-sized businesses that form the core of the German economy, and there are worries that Italian ownership could undermine its operations in this area.
UniCredit also seemingly wrongfooted the German government with its stakebuilding tactics, prompting a backlash from Berlin. The Italian group swooped on 4.5 per cent of Commerzbank by buying stock from the government, which sold shares in the Frankfurt-based lender last month and appeared to be taken by surprise by UniCredit’s move.
The Milan-based group is in the process of boosting its stake to about 21 per cent through the use of derivatives, although this increase in its holding requires the ECB’s approval. Olaf Scholz, the German chancellor, has called UniCredit’s move an “unfriendly” attack and warned: “Hostile takeovers are not a good thing for banks.”
Berlin does not possess powers that would allow it to block a deal, however. It still owns 12 per cent of Commerzbank, a stake that is a legacy of a €18.2 billion state rescue of the lender during the financial crisis. UniCredit’s move to snap up Commerzbank stock has prompted the government to put a halt to any further sales of shares it owns in the lender.
While Buch did not name either UniCredit or Commerzbank on Friday her comments, which were made in a speech in Lithuania, hint that the regulator is in favour, at least in principle, of deal-making that creates a supranational banking giant.
The lack of a deposit protection scheme that spans the European Union has long acted as a brake on deal-making and efforts to create a full banking union in the bloc.
Buch, who is a German economist, said: “The next phase of integration will be increasingly digital, rendering regional proximity less relevant. This makes the establishment of a European deposit insurance scheme all the more urgent. For consumers, such a scheme would provide reassurance that deposits with domestic banks are protected by the same standards as deposits with non-resident banks.”