The biggest hurdle to UniCredit's takeover of Commerzbank is gone. The ECB's banking supervisors have authorised the Italian bank to hold more than 30% of its German rival and to keep adding shares without a cap.
UniCredit built its position over the summer, when it secured Commerzbank shares through an exchange offer. The ECB decision lets it convert those shares into a holding that can cross the 30% line. UniCredit says it expects to reach about half of Commerzbank's voting rights towards the end of the year, once the remaining approvals and offer conditions are met. It called the ruling a key milestone that confirms the ECB's positive assessment of the deal.
The cost lands in Germany. Orcel plans to cut around 7,000 full-time jobs in the country and to thin out Commerzbank's international network. The mid-sized companies that make up the German Mittelstand will feel it most, because Commerzbank is one of their most important lenders. Whether a foreign banking group will fill that role as well is an open question.
Berlin has already said what it expects. Finance Minister Lars Klingbeil told Orcel that Commerzbank must stay listed, keep its base in Frankfurt and keep financing the Mittelstand. A combined group would hold more than €1.3 trillion in assets.
The ECB has done its part. What is left is a set of further approvals that UniCredit expects by year-end, and a political negotiation in Berlin over what the new owner may and may not do. The deal also supports the argument the European Commissioner for financial services, Maria Luís Albuquerque, made this week: that Europe's banks trail their American rivals on scale, not because of capital rules. A cross-border takeover of a major German lender is no longer a hypothetical. It is now a question of conditions, jobs and who lends to German industry.
