UniCredit Prepares Commerzbank Takeover Bid for Early Next Year, FT Reports

UniCredit SpA is preparing a bid to take control of Germany’s Commerzbank AG as early as January, a move that would mark the largest cross-border European banking deal since the financial crisis, according to a report from the Financial Times.

The Milan-based bank is awaiting final regulatory approvals before proceeding with its plan, the FT reported, citing people familiar with the matter.

The Takeover Strategy

UniCredit's strategy involves calling an extraordinary general meeting to replace the leadership at Germany's second-largest bank. The primary goal is to replace all 10 shareholder representatives on Commerzbank's 20-person supervisory board, which would give UniCredit an effective majority and control over the institution.

According to the report, the bank's base-case scenario targets securing control by the end of February, with a best-case timeline seeing the move completed in January. This action would pave the way for a significant strategic overhaul led by UniCredit CEO Andrea Orcel.

Post-Acquisition Restructuring

Ad

Once in control, Orcel reportedly plans a major restructuring of Commerzbank's operations to improve efficiency and focus on core clients. Key elements of the proposed overhaul include:

• Cutting parts of Commerzbank's international network.
• Unwinding approximately €20 billion of corporate lending outside of its core German and Polish markets.
• Focusing lending on activities essential to its German "Mittelstand" (small and medium-sized enterprise) clients.
• Implementing a significant reduction of the bank's overall cost base.

German Government's Position

The potential deal has been made more feasible by a recent shift in the German government's stance. Berlin, which holds a nearly 13% stake in Commerzbank following a bailout during the financial crisis, has reportedly moved from outright resistance toward a position of setting conditions for a potential takeover.

This change in attitude from a key shareholder is a critical development, removing a major obstacle that had previously complicated a potential merger between the two European banking giants.