San Francisco Frontiers - UniCredit ups pressure on Commerzbank, fuelling German anger

The saga began in September when UniCredit surprised markets and the German government by revealing that it had built a significant stake in Germany's second-biggest lender.

In its latest move, UniCredit, Italy's second-biggest bank, announced that it had boosted its holding in the German bank from 21 percent to around 28 percent.

A successful takeover by the Milan-based lender would amount to a major pan-European banking merger and some EU officials have backed the idea, saying it would create a heavyweight better able to compete internationally.

But the approach has sparked anger in Germany, with unions fearful it could lead to job losses and politicians -- lead by Chancellor Olaf Scholz -- speaking out against a merger.

After UniCredit's latest announcement, the German government slammed the Italian bank for "once again taking uncoordinated and unfriendly action" towards Commerzbank.

"Unfriendly attacks and hostile takeovers are inappropriate in the banking sector," deputy government spokesman Wolfgang Buechner told a regular press conference.

He also pointedly noted that UniCredit had "publicly stressed that it did not want to take any further action" before Germany holds early elections expected on February 23.

The elections are taking place after the collapse last month of Scholz's coalition government, and he currently heads a weak, minority administration unable to pass major bills.

- 'Political vacuum' -

The latest move from the Italians comes despite UniCredit Chief Executive Andrea Orcel having stressed last month he did not believe exploiting the political turbulence with a takeover bid would be the "right thing to do".

CMC Markets analyst Jochen Stanzl also said that going further at the moment could be a mistake for UniCredit.

"It would not be advisable for Unicredit to take advantage of the political vacuum in Berlin for a takeover," he told AFP.

"At least some of the players could still be part of a government after the elections, and they should not be made enemies with."

After its latest move, UniCredit said that its position in Commerzbank now totalled around 28 percent, of which 9.5 percent was held through a direct stake and about 18.5 percent through derivatives.

UniCredit's advances reflect its "belief in Germany, its businesses and its communities, and the importance of a strong banking sector in powering Germany's economic development", said the bank.

It added however that it was moving cautiously, to provide "full flexibility and optionality" as it pursued what it believed was "substantial value" in Commerzbank.

UniCredit said the added investment would not affect its bid for Italy's number three bank Banco BPM -- which has also sparked some resistance in Italy.

Commerzbank declined to comment on the latest development.

A large portion of UniCredit's shares were bought directly from the German government, which sold them off as it looked to unwind its position in Commerzbank.

Berlin still holds a 12-percent stake in the lender, the legacy of a government bailout during the 2008 global financial crisis.

Buechner said that, as a major shareholder, the German government "continues to support Commerzbank in its strategy and independence", noting the lender was "systematically important".

He said that UniCredit had previously described its Commerzbank stake as a "pure investment that can be dissolved at any time".

"The federal government expects that UniCredit will make use of this option."

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W.Carter--SFF