By Margot Patrick
UniCredit Chief Executive Andrea Orcel isn't giving up on buying Commerzbank.
The Italian bank he leads said Wednesday that it had increased its stake in the German rival, mostly through derivatives, to 28%, up from the 21% it previously disclosed.
It said the move "reinforces UniCredit's view that substantial value exists within Commerzbank that needs to be crystalized," but said it isn't pursuing a full merger just yet. "The position remains at this time solely an investment."
Shares in both banks rose on the news, indicating that investors see the virtues of a combination.
Some thought Orcel would put Commerzbank on the backburner after he opened a second M&A battle last month with a $10.5 billion bid for fellow Italia lender Banco BPM. BPM has rejected the offer.
Owning most of the Commerzbank stake through derivatives gives Orcel flexibility. The derivatives don't consume as much capital and are fully hedged against changes in Commerzbank's share price. UniCredit is in dialogue with the European Central Bank over gaining approval to hold a stake up to 29.9%.
Orcel had hoped to break the logjam in Europe's fragmented banking market by tying up with Commerzbank. Unicredit already owns a large German bank, HVB.
But German politicians and Commerzbank rejected UniCredit's arguments that combining the two would boost smaller companies and the economy.
Orcel has recently said he'll wait until after Germany's federal elections, expected in February, and reassess the situation.
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(END) Dow Jones Newswires
December 18, 2024 06:31 ET (11:31 GMT)
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