Germany turns up heat on UniCredit as Orcel urges talks over Commerzbank By Reuters

By Valentina Za and Christian Kraemer

MILAN/BERLIN (Reuters) -Germany cranked up its opposition on Wednesday to UniCredit’s raid on Commerzbank (ETR:) at the same time as a big investor in the German lender called for talks, which are being sought by the Italian bank’s CEO Andrea Orcel.

Red lines are being drawn a fortnight after UniCredit shocked politicians and investors by securing a significant stake in Commerzbank and Orcel laid out his vision for a rare cross-border European banking merger.

Berlin, which retains a 12% stake in Commerzbank, the bank’s management and trade unions all oppose a deal and a top German official called UniCredit’s actions “aggressive” and “unwise”.

Orcel has said all options — including walking away — are on the table, while also building up UniCredit’s stake.

“Commerzbank, for us at the moment, is an investment, nothing else. There is no offer, there is no bid,” Orcel told a Bank of America investor conference in London.

“We’re indeed a large shareholder, a strategic shareholder now, but it is an investment … and people should comment and think about that as an investment and nothing else,” he said, adding UniCredit would not ask for a Commerzbank board seat.

But Orcel also pressed for more talks, saying UniCredit had spoken “repeatedly with several stakeholders” before it was invited to buy a 4.5% stake from the German government.

“We felt that that was a normal consequence of that process. And that’s where we are today, but we’re very keen to reopen those dialogues and have constructive dialogue with all the stakeholders,” he added.

UniCredit angered the German government this week by raising its holding in Commerzbank to close to 21%, conditional on European Central Bank approval, using derivative instruments. 

German Chancellor Olaf Scholz slammed the move as “an unfriendly attack” and on Wednesday finance ministry state secretary Florian Toncar warned UniCredit against turning hostile, saying such takeovers harboured great risks.

“It is not wise to proceed too aggressively with a large, highly regulated, complex bank,” Toncar said after a closed-door meeting with the finance committee of Germany’s lower house of parliament. “You always need the stakeholders in the end.”

Orcel’s move is a huge test for European banking consolidation, which has long been sought by regulators and banking executives but stymied by political opposition and the weakness of many lenders to acquire rivals.

It will also pose a challenge for Commerzbank’s new chief executive Bettina Orlopp, who will assume the task of fending off UniCredit’s move on Germany’s No. 2 lender from Sept. 30, stepping up from her position as finance chief.

A large investor in Commerzbank on Wednesday urged it to engage with UniCredit.

“Cooperation with UniCredit – in whatever form – does not have to be to the detriment of Commerzbank,” said Union Investment fund manager Alexandra Annecke.

“We therefore expect a willingness to enter into an open-ended dialogue,” Annecke added in a statement by Union Investment, which holds 1.5% of Commerzbank.

Michael Schrodi, a lawmaker from the SPD party of Social Democrats in Germany’s governing coalition, accused UniCredit of being “utterly secretive” in gaining control of 21% of Commerzbank.

Shares in Commerzbank have risen sharply since Orcel’s move as investors bet on a full takeover bid by UniCredit, which is flush with cash after a run of record profits and already has a presence in Germany through its ownership of HVB.