Can Andrea Orcel be stopped from buying Commerzbank?

{"text":[[{"start":13.3,"text":"When UniCredit bought 9 per cent of Commerzbank this month, the Italian bank’s chief executive Andrea Orcel sought to reassure Berlin of his intentions by saying cross-border deals in the industry could not happen against the will of governments. "}],[{"start":25.55,"text":"Outside its home market, any bank needed the “support from local institutions”, he said, noting UniCredit “always entertained a dialogue with regulators, institutions and counterparts in Germany”. "}],[{"start":36.5,"text":"That dialogue appears to have broken down. "},{"start":39.304,"text":"On Monday, UniCredit said it was about to overtake the German government as Commerzbank’s biggest shareholder with a 21 per cent stake after taking a position — pending regulatory approval — on a further 11.5 per cent of the German lender’s stock. "}],[{"start":53.5,"text":"In New York that day, Chancellor Olaf Scholz said: “Unfriendly attacks [and] hostile takeovers are not a good thing for banks and that is why the German government has clearly positioned itself. ”"}],[{"start":64.78999999999999,"text":"What, if anything, can the German government, regulators and rival banks do to thwart Orcel’s ambitions to take over Commerzbank? "}],[{"start":72.93,"text":"

What can Germany do?

"}],[{"start":75.60000000000001,"text":"German politicians across the political spectrum have been united in their condemnation of what they perceive as Orcel’s aggressive tactics. "},{"start":82.667,"text":"But the government has few tools to block a takeover bid. "}],[{"start":86.74000000000001,"text":"Berlin had already said on Friday that it would no longer put its remaining 12 per cent stake up for sale. "},{"start":92.444,"text":"Instead, Orcel found another way to increase UniCredit’s stake, through derivative instruments. "}],[{"start":98.30000000000001,"text":"The German government’s powers to shoot down takeovers were strengthened after robotics maker Kuka was acquired in 2016 by Chinese group Midea in an acrimonious takeover that fostered fears of a sellout of engineering expertise. "},{"start":110.57900000000001,"text":"But outside of the defence industry, the rules apply only to buyers from non-EU members. "}],[{"start":115.95000000000002,"text":"UniCredit needs permission to lift its stake in Commerzbank above 10 per cent, but from its regulator, the European Central Bank, not Berlin. "}],[{"start":124.98000000000002,"text":"Mechthilde Wittmann, an MP for the opposition CSU party, said Scholz should “take the next plane to Rome and tell [Italian prime minister Giorgia] Meloni that this takeover can’t happen. "},{"start":135.67200000000003,"text":"We won’t agree to it”. "}],[{"start":137.38000000000002,"text":"Others, however, disagree. "},{"start":140.13400000000001,"text":"“I don’t see that the German authorities have any leverage,” said Hans-Peter Burghof, a banking expert at Hohenheim university. "}],[{"start":147.92000000000002,"text":"“UniCredit is a European bank and so European rules on competition, bank supervision and capital markets apply. "},{"start":154.64900000000003,"text":"And the German authorities don’t really have any say in the matter. ”"}],[{"start":158.58,"text":"Ministers were within their rights to express their opinion on a possible takeover, as Scholz did on Monday, “but it’s just a description”, said Burghof. "},{"start":167.209,"text":"“Yes, it’s a hostile takeover . . . and they can express their annoyance, but little more than that. ”"}],[{"start":172.56,"text":"

What can the ECB do?

"}],[{"start":174.92000000000002,"text":"The idea of a UniCredit merger with Commerzbank was initially welcomed within the ECB, which has long called for more cross-border consolidation in the sector. "}],[{"start":184.24,"text":"But some at Europe’s top banking regulator are annoyed about what they regard as Orcel’s “aggressive” tactics, according to people familiar with their views. "}],[{"start":192.32000000000002,"text":"European rules on bank ownership — designed to prevent criminals and shady funds from getting control of a bank — are complex and bureaucratic. "}],[{"start":200.27,"text":"Joachim Kaetzler, banking partner at law firm CMS Hasche Sigle, described them as “an avalanche of documents”. "}],[{"start":207.74,"text":"However, “reasons to reject the application [by UniCredit to take its stake above 10 per cent] are highly unlikely to arise”, said Kaetzler, because the Italian bank was one of Europe’s largest and most profitable lenders and its top-ranking officials had been approved by the ECB. "}],[{"start":223.68,"text":"Under the application rules, the ECB is required to make a decision within 60 days but can add another 30 days in complicated cases. "}],[{"start":232.28,"text":"With BaFin, Germany’s financial regulator, responsible for assembling the application to be submitted to the ECB, German bureaucrats in theory have scope to take a particularly rigorous approach — by requesting additional documents, for instance. "}],[{"start":246.62,"text":"“An ownership-control procedure can easily take six to 12 months,” said Kaetzler. "}],[{"start":252.27,"text":"

What can other banks do?

"}],[{"start":254.94,"text":"Any bidder deemed preferable to UniCredit would have to secure support from the government. "}],[{"start":260.25,"text":"The most obvious candidate is Deutsche Bank, which has discussed a move for Commerzbank several times before. "}],[{"start":266.86,"text":"Such a deal would mean Commerzbank — a crucial lender to the Mittelstand, the small and medium companies that form the backbone of the German economy — remained in domestic hands. "}],[{"start":277.12,"text":"However, it would result in a large number of job cuts and branch closures, which may be unpalatable to German voters and unions. "}],[{"start":284.72,"text":"Deutsche is also not in the best position to buy Commerzbank, as it would have to pay in cash for shares owned by the government or in the open market. "}],[{"start":292.81,"text":"Doing so would disrupt plans to return €8bn to shareholders by 2025, which Germany’s largest lender paused earlier this year after taking a €1.3bn hit from a long-running lawsuit. "}],[{"start":305.15,"text":"Deutsche Bank boss Christian Sewing said this month he was unfazed about a potential takeover of Commerzbank by UniCredit. "},{"start":311.779,"text":"“Competition is good for business”, he added. "}],[{"start":315.45,"text":"Other banks such as France’s BNP Paribas, Spain’s Santander and ING of the Netherlands could also be encouraged to make a bid. "}],[{"start":323.52,"text":"These banks do not have German operations of the size of UniCredit’s HypoVereinsbank, so such a combination would not benefit from the same synergies. "}],[{"start":332.46,"text":"Entering a bidding war with a rival holding a 21 per cent stake is another complication. "}],[{"start":337.87,"text":"

What can Commerzbank do?

"}],[{"start":340.78000000000003,"text":"Orcel unveiled his initial move on Commerzbank hours after the German bank said its chief executive Manfred Knof would leave by the end of 2025. "}],[{"start":349.72,"text":"Commerzbank on Tuesday evening appointed chief financial officer Bettina Orlopp as its new chief executive to champion the lender’s standalone strategy and rally investor support. "}],[{"start":359.31,"text":"But even Commerzbank insiders who are sceptical about a deal acknowledge that it will be almost impossible to present a standalone strategy that is financially as attractive as a merger. "}],[{"start":369.08,"text":"A combination with HypoVereinsbank would result in billions of euros of cost savings and economies of scale. "}],[{"start":375.5,"text":"Commerzbank could come up with a poison pill to scupper the deal — for example by agreeing to sell its corporate bank to Deutsche Bank in exchange for a stake in the rival. "}],[{"start":384.36,"text":"But people close to Commerzbank told the Financial Times that management “won’t do anything crazy” to derail a UniCredit bid if it came at the expense of the German lender’s franchise. "}],[{"start":394.06,"text":"The alternative may be to try to squeeze a generous takeover premium from Orcel, as well as guarantees to keep decision-making and a listing of the German operations in Frankfurt. "}],[{"start":402.93,"text":""}]],"url":"https://creatives.ftmailbox.cn/album/172939-1727233101.mp3"}