German Government Investigates Itself Over UniCredit’s Shock Commerzbank Stake Purchase

When German-speaking composer Mozart and Italian librettist Da Ponte teamed up for “Don Giovanni,” they brought together melodrama, comedy, and the supernatural. When Italian bank UniCredit took a stake in German Commerzbank last week, it opted for just a boatload of melodrama.

The latest chapter: The German government has launched an internal probe, sources told Bloomberg Thursday, trying to figure out how it was blindsided by UniCredit staking out a major position in one of the country’s most historically important lenders.

Drama on the Main (River)

Last week, Milan-based UniCredit, which is Italy’s second-largest bank, announced it had built a 9% stake in Frankfurt-based Commerzbank, Germany’s second-largest private-sector bank. Overnight, the Italians became Commerzbank’s second-largest shareholder.

The German government had reduced its own stake in Commerzbank to 12% and figured the sale would be bought up in pieces by institutional investors. But UniCredit bought a roughly 4.5% stake from the government’s partial exit, and CEO Andrea Orcel went fishing around on the market for the second half of the stake, news magazine Der Spiegel reported. Orcel then announced he was angling for a full takeover, something he reiterated in an interview Wednesday with the newspaper Frankfurter Allgemeine Zeitung. He’s already taking steps to get there, but battles await:

• On Tuesday, UniCredit sought approval from the European Central Bank to own up to 30% of Commerzbank, Italian newspaper Il Messaggero reported. The ECB has to approve stakes at the 10%, 20%, 30%, and 50% thresholds — ECB President Christine Lagarde hinted that “cross-border bank mergers are desired by many authorities” in the EU, something supporters say would increase their competitiveness abroad.
• Verdi, the powerful German services sector union that holds two seats on Commerzbank’s board, said it will fight a merger “tooth and nail,” citing UniCredit’s transfer of decision-making power from its Germany subsidiary HypoVereinsbank to Italy.

We’re No. 1: Deutsche Bank, Germany’s largest bank, is plotting to block the deal, knowing a merger might create a new banking giant that could surpass it as the country’s largest lender. One option being entertained in the immediate term is buying the German government’s remaining 12% stake.