German regulator BaFin refers UniCredit's Commerzbank offer to the ECB

The German financial regulator BaFin has moved to the next stage in reviewing the Italian UniCredit SpA's offer to acquire a controlling stake in Commerzbank AG. After confirming in late July that the application to acquire more than 30% of the German bank's capital meets the requirements, BaFin referred the documentation to the European Central Bank (ECB).

Deadlines and regulatory procedure

The ECB is required to conduct its official assessment and make a final decision within 60 working days. The regulator also has the right to request additional information, which could extend the process by another 20 working days. Adhering to these deadlines, a final decision is expected to be made by October at the latest.

The ECB's review will focus on whether UniCredit meets the requirements for increasing its stake above the "qualifying holding" threshold. It is expected that if the ECB finds that the Italian group exercises effective control, it will require the consolidation of Commerzbank into UniCredit's balance sheet, which would lead to higher capital requirements for the Italian bank. Since UniCredit has been under direct ECB supervision within the Single Supervisory Mechanism for over a decade, no serious objections regarding the bank's reputation or the experience of its management are expected.

Strategic plans and negotiations

UniCredit's offer is valued at 44 billion euros and aims to acquire just under 50% of Commerzbank's capital. This is part of the long-term strategy of UniCredit CEO Andrea Orcel, who plans large-scale changes in the German institution. Orcel stated that he expects the necessary regulatory approvals to be obtained before the end of the year.

However, these plans are facing resistance from Commerzbank's management and employees, as well as from the German government, which owns about 12% of the bank. Commerzbank's management questions the feasibility of Orcel's plans if he holds less than 50% of the capital. In the context of future negotiations, Commerzbank CEO Bettina Orlopp and Andrea Orcel are expected to hold a planned video conference shortly after the publication of the German bank's second-quarter financial results. Previous meetings between the two managers have ended in serious disagreements.

In addition to ECB approval, UniCredit must obtain clearances from European competition authorities, the US Federal Reserve, and the relevant Polish regulator, as Commerzbank operates in the US and owns the Polish mBank SA.

Market reaction

The news triggered a positive reaction in the stock markets. UniCredit shares rose by more than 2%, reaching their highest level in nearly 17 years, which increased its market capitalization to 129 billion euros. Commerzbank shares also noted a rise of over 2%, reaching their highest value in almost 16 years, with a market valuation of nearly 43 billion euros.