Analysis-How UniCredit CEO outmanoeuvred Germany on Commerzbank

By John O'Donnell, Tom Sims and Christian Kraemer

FRANKFURT/BERLIN, Aug 27 (Reuters) - For nearly two years, UniCredit CEO Andrea Orcel has pursued Commerzbank despite public opposition from Berlin. Now, as he prepares for what could be a pivotal encounter with Germany's finance minister, the balance of power in the takeover battle appears to have shifted in his favour.

After months of trying to secure face-to-face talks with German officials, Orcel learned this month that Finance Minister Lars Klingbeil was prepared to meet. Rather than wait for an invitation, Orcel emailed Klingbeil on Monday to press his case directly, according to a person with direct knowledge of the matter. Within 48 hours, he received an invitation.

The veteran dealmaker's persistence has collided with German efforts to keep control of a bank viewed as critical to the country's economic model. Commerzbank is one of the largest lenders to Germany's Mittelstand, the medium-sized companies that form the backbone of Europe's largest economy, and politicians have repeatedly opposed UniCredit's overtures.

Yet successive governments struggled to mount a coherent response. The tussle unfolded as coalition partners were distracted by infighting, efforts to revive Germany's struggling economy and the growing challenge posed by the far-right AfD, according to sources familiar with the discussions.

Politicians examined options for resisting UniCredit but, without obvious legal means to block a deal, disagreed over how far to go and faced practical constraints, they said.

Some favoured a more forceful response, including bolstering the state's sway in Commerzbank, the sources said, speaking on condition of anonymity. Others questioned whether potential extra spending could be justified given competing demands, such as for defence.

The planned meeting, scheduled for September 14, comes as resistance to UniCredit's approach has softened.

Commerzbank's campaign against a deal has faded after UniCredit amassed a stake approaching 50%, enough to determine shareholder resolutions. In July, Chairman Jens Weidmann proposed talks with UniCredit after months of resistance.

With Commerzbank, UniCredit and Berlin all now preparing to talk, the debate is increasingly focused on the terms of a deal rather than whether one can be prevented.

ORCEL'S DETERMINATION MEETS DIVIDED GERMANY

The takeover battle began after Berlin sold part of its stake in Commerzbank — the legacy of a financial crisis-era bailout — in September 2024.

Government officials later said they had not expected the Italian bank to emerge as the buyer. UniCredit subsequently increased its holding, turning a surprise investment into a takeover campaign.

Hans-Peter Burghof, a banking expert at Germany's University of Hohenheim, described the potential takeover as an "accident" resulting from German "incompetence" and a "misunderstanding between different financial cultures".

"Italians defend their banking system, and we do not," he said.

Germany's finance ministry did not respond to a request for comment.

A combination of UniCredit and Commerzbank would create a bank with more than €1.3 trillion ($1.5 trillion) in assets across two of the euro zone's largest economies.

The deal would also align with the European Central Bank's long-standing push for greater cross-border consolidation in European banking. Reuters has reported that the ECB is leaning towards approving the transaction.

Policymakers say larger institutions are needed to compete more effectively and deepen financial integration across the euro zone.

That argument has found support among some investors. Since UniCredit emerged as a shareholder two years ago, Commerzbank's shares have more than tripled, while UniCredit's stock has more than doubled, outperforming broader markets.

However, the prospect of foreign control has fuelled concerns among some German politicians and labour representatives about the future direction of an institution long seen as part of the country's financial establishment.

Commerzbank serves more than 25,000 business customers, employs more than 40,000 people and plays a key role in financing Germany's foreign trade.

At times, Orcel's approach has generated friction.

In April, he said Commerzbank's "current trajectory will put at risk its survival in the medium term" and subsequently launched a short-lived advertising campaign critical of the German bank. Germany's BaFin regulator intervened and ordered UniCredit to stop.

Orcel nevertheless continued pressing his case.

In June 2025, he wrote to Chancellor Friedrich Merz seeking a meeting in person.

"As I have repeatedly said, I would like to sit around a table and discuss this matter face-to-face," Orcel wrote, according to a copy of the letter seen by Reuters.

Merz did not agree to meet, but Orcel didn't give up. He took his case to investors, outlining how he envisioned a deal.

Now talks about a combination are about to start, but could prove every bit as boisterous as the takeover tussle so far.

Even Frankfurt's skyline could become part of the debate. Commerzbank has agreed to move into a new tower, and the building's landlord said on Thursday its logo could still change.

(Reporting By John O'Donnell, Tom Sims and Christian Kraemer; additional reporting by Amy-Jo Crowley. Editing by Elisa Martinuzzi and Mark Potter)