A protester holds a placard with the slogan “Stop Merger Terror” during a union demonstration outside Commerzbank's headquarters in Frankfurt, Germany, on Tuesday, September 24, 2024.
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Italian lender UniCredit's potential multibillion-euro merger of Frankfurt-based Commerzbank appeared to have caught German authorities off guard, triggering a strong reaction in Berlin.
Market observers told CNBC that the takeover could embarrass the German government, which is firmly opposed to the move, and some believe the outcome of the takeover attempt could even jeopardize the significance of the European project.
Milan-based UniCredit announced on Monday it had increased its stake in Commerzbank to about 21% and submitted a request to increase its stake to 29.9%. This follows UniCredit's acquisition of a 9% stake in Commerzbank earlier this month.
“If UniCredit can bring Commerzbank up to their efficiency level,” Octavio Marenzi, CEO of consulting firm Opimas, told CNBC's “Squawk Box Europe” on Tuesday. Then there will be huge advantages in improving profitability.
“But (German Chancellor) Olaf Scholz is not an investor. He is a politician and he cares deeply about jobs. If you look at UniCredit’s Italian operations (especially in streamlining What Germany has done on the business side is impressive,” Marenzi said.
According to Reuters, Scholz on Monday criticized UniCredit Bank's decision to increase its bet on Commerzbank, calling the move an “unfriendly” and “hostile” attack.
Meanwhile, Commerzbank Vice Chairman Uwe Tschaege reportedly expressed opposition to a potential takeover by UniCredit on Tuesday. Speaking outside the bank's headquarters in central Frankfurt, Tschaege said the message was simple: “We don't want this.”
“When I heard his commitment to cost savings, I felt sick,” Tschaege reportedly added, referring to UniCredit CEO Andrea Orcel.
Separately, Commerzbank supervisory board member Stefan Wittman told CNBC on Tuesday that up to two-thirds of the bank's jobs could disappear if UniCredit succeeds in a hostile takeover.
The bank has not yet responded to a request for comment on Wittman's statement.
Although Spanish bank BBVA shocked markets in May with an all-share takeover bid for domestic rival Banco Sabadell, hostile takeover bids are uncommon in the European banking industry. The latter rejected the Spanish bank's takeover bid.
Opimas' Marenzi said the German government and unions are “basically looking at this issue and saying it means we're probably going to lose a lot of jobs in the process, and probably quite a lot of job losses.”
“The other thing is that it could cause national embarrassment if the Italians come in and show them how to run a bank,” he added.
A German government spokesman was not immediately available when contacted by CNBC on Tuesday.
scholz in germany Before Promote the establishment of the European Banking Union. In the wake of the 2008 global financial crisis, the EU executive announced plans for a banking union to improve supervision of lenders across the region.
What's the danger?
Craig Coburn, Bank of America's former global head of equity capital markets, said the German government needed to find “very good” reasons to block UniCredit's action against Commerzbank, warning that it must also be consistent with the principles of European integration .
“I think it would be difficult for UniCredit to take over Commerzbank or come to an agreement with Commerzbank without the approval of the German government, that's just a practical matter – but I think if Germany wanted to intervene (or) if It wants to stop what UniCredit is doing,” Coburn told CNBC's “Squawk Box Europe” on Tuesday.
Commerzbank headquarters in Frankfurt, Germany, Thursday, September 12, 2024.
Emanuele Cremaschi | Getty Images News | Getty Images
“Germany has signed up to the (EU) single market, single currency, banking union, so blocking the merger on the grounds of national interest would be inconsistent with those principles,” he continued.
“I think that's what's really at stake: What is the point of banking union? What is the point of the European project?”
Former European Central Bank President Mario Draghi said in a report released earlier this month that the EU would need hundreds of billions of euros in additional investment to achieve its key competitiveness goals.
Draghi, who previously served as Italian Prime Minister, also pointed out in the report that the “incomplete” banking union is one of the factors that continues to hinder the competitiveness of the region's banks.
—CNBC’s April Roach contributed to this report.