Share share increases significantly: ECB clears the way for Unicredit to take over Commerzbank

The European Central Bank supports a merger between Unicredit and Commerzbank. Now it is approving a share swap that will allow the Italians to significantly increase their stake in the Frankfurt company. The change of power is imminent.

Unicredit says it has received the green light from the banking supervisory authority of the European Central Bank (ECB) to take over Commerzbank shares. This means that the major Italian bank can convert the Commerzbank shares that it secured in an exchange offer in the summer into its own shares.

The ECB has approved the takeover of control of Commerzbank, Unicredit announced. Approval has been received to exceed the threshold of 30 percent of the equity stake in Commerzbank and to further increase the share without an upper limit.

"The decision represents an important milestone in Unicredit's acquisition of Commerzbank and underlines the ECB's positive assessment of the transaction as well as confidence in Unicredit's solid fundamentals and strong position within the European banking sector," it said.

The remaining regulatory procedures and conditions for completing the offer for Commerzbank are therefore expected to be completed towards the end of the year. At this point, Unicredit will have around 50 percent of the voting rights in Commerzbank and will be able to take control of the bank, it said.

This step comes as no surprise

The major bank from Milan submitted an offer for all Commerzbank shares in May and thus secured access to almost half of the shares in the DAX group - partly indirectly through complex financial transactions. However, ECB approval was still pending for the share swap to be completed, which is considered a key step. Unicredit's shareholding in Commerzbank is now increasing from almost 30 to almost 50 percent.

The European Central Bank's banking supervisory authority monitors the largest financial institutions in the euro area. Her approval comes as no surprise: she has repeatedly made it clear that she supports cross-border bank mergers in the euro area in order to strengthen the EU's internal market.

Unicredit can now buy additional Commerzbank shares freely on the market. The Italians could also submit another offer, but this would be expensive because of the usual takeover premium.

Thousands are at risk of losing their jobs

Unicredit has been fighting for Commerzbank for around two years and has continued to increase its share despite resistance from Germany. The major Milan bank, which is already represented in Germany by Hypovereinsbank (HVB), sees potential for billions in savings, including the reduction of thousands of jobs. Unicredit and Commerzbank are now in talks about a possible merger.

The federal government, which has a say with its Commerzbank share of a good 13 percent, wants to prevent redundancies for operational reasons at the DAX group with around 40,000 full-time employees worldwide. He wants to ensure that Commerzbank remains a listed stock corporation based in Frankfurt and continues its strong medium-sized business.