The European Central Bank is expected to approve UniCredit's acquisition of a stake in Commerzbank, potentially leading to the largest cross-border banking deal in Europe since the global financial crisis. ECB staff are finalizing their assessment of UniCredit's purchase of 29.9% of Commerzbank, with a decision anticipated by early March, followed by approval from the regulator's Supervisory Board later in the month.
Recent reports suggest that the ECB's assessment of the banks' stability was positive, paving the way for UniCredit to increase its stake. Despite declined comments from the ECB, Commerzbank, and UniCredit, shares in the German bank rose following the news, closing at a 13-1/2 year high of 20.56 euros.
UniCredit CEO Andrea Orcel, known for his dealmaking acumen, surprised the German corporate landscape by acquiring shares in Commerzbank and moving towards a potential merger. The ECB's potential approval for UniCredit to hold nearly 30% in Commerzbank would be a significant regulatory milestone.
Orcel's goal of a complete takeover has faced opposition in Germany, with some labeling it as "hostile". A merger between UniCredit and Commerzbank would mean one of Italy's major banks acquiring Germany's second-largest publicly traded lender, which is still partly state-owned following a bailout in 2008.
While challenges such as the absence of a common deposit protection scheme and restrictions on capital movements hinder cross-border banking mergers in Europe, top ECB supervisors advocate for such consolidations. They argue that European banks need to grow larger and expand beyond domestic markets to compete globally, particularly against American peers.
Ultimately, the ECB's governing bodies, including President Lagarde, will need to endorse the supervisors' decisions to allow the proposed banking deal. Despite concerns from German politicians like Friedrich Merz about potential impacts on German banking and export financing, including recent job cuts at Commerzbank, discussions around the deal continue as UniCredit seeks to solidify its position in the German banking sector.