UniCredit Eyes Major Stake in Commerzbank Amid Potential Takeover

Italy's UniCredit is seeking to increase its stake in Germany's Commerzbank to up to 29.9%, pending European Central Bank (ECB) approval. This could lead to a full takeover, but ECB's green light is crucial. ECB evaluates buyer's reputation, financial health, and impact on the banking sector.

UniCredit, Italy's second-largest bank, is making strategic moves to expand its influence in the European banking sector by acquiring a significant stake in Germany's Commerzbank. Currently holding 9%, UniCredit aims to increase this to 29.9%, a move that requires approval from the European Central Bank (ECB).

For stakes exceeding 10%, the ECB steps in to thoroughly evaluate the buyer's motives, reputation, financial stability, and its overall impact on the banking ecosystem. A crucial criterion for approval includes ensuring that UniCredit remains financially robust and forms a stronger, more competitive banking group post-acquisition.

The ECB historically supports cross-border mergers as a means to enhance competitiveness among eurozone banks, which are currently lagging behind their U.S. counterparts. However, previous mergers have faced various hurdles, including political implications. Should UniCredit's bid advance, Germany might have to forego control over its second-largest bank, adding a political layer to the financial complexities involved.

(With inputs from agencies.)