UniCredit raises stake in Commerzbank to 28% as Orcel ups ante on pursuit

Italy’s UniCredit said on Wednesday it has raised its potential stake in Commerzbank to 28% using further derivatives, as markets watch whether it will take the leap with a buyout of the German lender.

This marks an increase from a 21% holding previously.

Italy’s second-largest bank said its ownership now consists of a 9.5% direct stake and around 18.5% through derivative instruments.

UniCredit has applied to the European Central Bank for permission to acquire a stake of up to 29.9% in the German bank, as CEO Andrea Orcel simultaneously pursues a bid for Italian peer Banco BPM.

“This move reinforces UniCredit’s view that substantial value exists within Commerzbank that needs to be crystalized,” UniCredit said in a press release Wednesday. “It reflects the belief in Germany, its businesses and its communities, and the importance of a strong banking sector in powering Germany’s economic development.”

The lender stressed its position remains “solely an investment” at this time and does not impact its 10-billion-euro ($10.49 billion) offer on Banco BPM. Analysts hold that Orcel could still sweeten his bid and introduce a cash component to pursue domestic consolidation. In a statement accompanying its Banco BPM offer in November, UniCredit noted that such a merger would serve it to “consolidate its competitive position and expand its presence in Italy,” where it is second to Intesa Sanpaolo.

UniCredit has yet to warm its German takeover target or the Berlin administration to a potential deal. Commerzbank on Wednesday said it has “taken note of the announcement” but declined to comment beyond pointing to its strategy, which is currently being upgraded and will be disclosed on Feb. 13.

The German government has so far opposed Orcel’s courtship of Commerzbank, but faces its own turbulence after the collapse of the ruling coalition and Chancellor Olaf Scholz’s loss of a no-confidence vote earlier this week cleared the path for elections in February. The German administration retains a 12% holding in Commerzbank, after offloading a 4.5% stake in September in an effort to exit its position in the lender it bailed out during the 2008 financial crisis.

A merger with Commerzbank in Germany, where UniCredit operates through its HypoVereinsbank division, could create synergies in capital markets, advisors, payments and trade finance activity, analysts have previously signaled.

UniCredit shares were up 1.1% at 9:44 a.m. London time, with Commerzbank stock rising 3.1%.

— CNBC’s Greg Kennedy contributed to this report.