UniCredit announced on Monday that it had formally increased its direct stake in Commerzbank to around 26%, bringing the Italian bank closer to acquiring Germany's second-largest private lender in what is being viewed as a hostile takeover.
The Milan-based institution also announced that it would convert its remaining financial instruments into Commerzbank shares "in due course," which would bring its stake to approximately 29%.
If the 30% threshold is exceeded, UniCredit would be legally required to make an official purchase offer to the remaining shareholders of the Frankfurt-based DAX-listed company.
There are significant concerns in Germany that a merger would lead to job cuts and branch closures.
Both Commerzbank and the German government have strongly opposed a takeover. Commerzbank's board and works council have repeatedly described the Italians' actions as "hostile."
On behalf of the government, Germany's Finance Ministry rejected UniCredit's "uncoordinated and unfriendly" approach.
Chancellor Friedrich Merz reaffirmed in a letter to the company's works council chairman, Sascha Uebel, that the government is committed to a "strong and independent Commerzbank."
UniCredit CEO Andrea Orcel has been advocating the benefits of a cross-border merger since late last year, undeterred by resistance in Germany.
UniCredit already has a foothold in the German market through Hypovereinsbank (HVB) and sees opportunities in business with private and medium-sized corporate clients.
In a statement, the Italian bank said it was reinforcing its position as Commerzbank's largest single shareholder, adding that while it does not intend to appoint a member to the board, it will continue to monitor the institution's progress in sustainably strengthening its business and creating value.
UniCredit stressed that the investments it has made to date have created considerable added value for its shareholders. "We are hopeful that this positive trajectory continues," the statement said.
Commerzbank emphasized that it would continue to work on implementing its strategy: "The increased shareholding does not change the fundamental situation or our position."
"Commerzbank is excellently positioned and well on its way to establishing itself as a major player among the leading European banks," it added.
In September, UniCredit took advantage of the German government's partial exit from Commerzbank to acquire a large stake in the bank. In addition to a direct stake of just under 10%, the Italian lender secured access to almost 19% more via financial instruments.
At the beginning of July, UniCredit converted a good half of these financial instruments into shares and, with around 20%, overtook the German government as Commerzbank's largest shareholder.
The government still holds some 12% of the shares and recently ruled out further share sales.
Commerzbank plans to maintain its independence by cutting thousands of jobs and increasing profits. After record profits of just under 2.7 billion euros ($3.2 billion) in 2024, the surplus is expected to grow to 4.2 billion euros by 2028.
