optimism increases at Commerzbank - Banking giant Commerzbank is gaining more self-assurance
In the heart of Europe's banking landscape, a significant struggle is unfolding between Commerzbank and UniCredit. This defensive battle revolves around UniCredit's aggressive stake-building and Commerzbank's strategic measures to maintain its independence, in the face of strong political and regulatory resistance in Germany.
Commerzbank's defensive strategy is multifaceted. The bank plans to conduct a significant €1 billion share buyback program at an average price of €21.81 per share, aiming to support its valuation and block UniCredit's influence. Additionally, Commerzbank has committed to a 100% payout ratio of net profits to shareholders (excluding restructuring costs), which boosts investor returns and complicates UniCredit's takeover appeal. Furthermore, Commerzbank has raised its profit targets for 2025, based on operational improvements like cost-cutting, digitalization, and strong margins even under ECB monetary pressures.
On the other hand, UniCredit's approach is more calculated. The bank is gradually increasing its stake in Commerzbank to just under the 30% threshold (currently ~29.9%), which triggers German mandatory takeover rules but remains approved by the ECB and antitrust authorities. UniCredit is using derivatives conversion to raise its influence without launching an immediate hostile takeover.
The German government, which holds a substantial stake (~12.1%) in Commerzbank, has been clear in opposing UniCredit's takeover attempts. Commerzbank is considered a national institution vital for financing SMEs and German economic sovereignty. Chancellor Friedrich Merz called UniCredit's stake accumulation a “hostile attack,” and the Finance Minister stressed any merger must be coordinated with Commerzbank management, signaling political blocking of aggressive bids.
This conflict embodies a broader European tension between banking consolidation for efficiency and national banking sovereignty. Commerzbank's defensive profit targets, buybacks, and strong political backing aim to preserve its independence, while UniCredit's methodical stake accumulation seeks eventual control without provoking a forced takeover.
| Aspect | Commerzbank | UniCredit | German Authorities | |------------------------------|-----------------------------------------------------------|------------------------------------------------------------|----------------------------------------------------------| | Shareholding | Targets to defend share price, running €1bn buybacks | Increased stake to ~29.9% via derivatives without takeover | Holds 12.1% stake, opposes hostile takeover | | Profit and payouts | 100% net profit payout (excl restructuring), record guidance | Critical of Commerzbank’s profits as inflated | Supports Commerzbank’s independence due to national role | | Political/regulatory context | Strong political support, sovereign banking concerns | ECB and antitrust approved stake but politically resisted | Considers Commerzbank “national institution” | | Strategy | Defensive: independence via buybacks and shareholder returns | Gradual stake build to pressure board without full bid | Blocks aggressive consolidation attempts |
This standoff is a reflection of Europe’s fragmented banking landscape and ambitions for larger pan-European banking champions to compete globally. As the battle continues, both banks and the German authorities will need to navigate the complexities of banking consolidation, national sovereignty, and the interests of shareholders and SMEs.
- In an attempt to maintain its independence, Commerzbank's defensive strategy involves a €1 billion share buyback program and a 100% payout ratio of net profits to shareholders, which aim to support the bank's valuation and complicate UniCredit's takeover appeal.
- UniCredit, on the other hand, is increasing its stake in Commerzbank gradually without launching an immediate hostile takeover, using derivatives conversion to raise its influence in the bank's management.
