Commerzbank Declines After German Government Rules Out Further Share Sales

Shares of Commerzbank and UniCredit saw a decline on Monday following the announcement from the German government that it would retain its 12% stake in Commerzbank for the time being. This decision indicates that a potential merger with UniCredit is currently not in the cards.

At 5:08 a.m. ET (0908 GMT), Commerzbank’s shares were down 4.9%, while UniCredit’s shares fell by 1.6%.

On Friday, Germany’s Finance Agency clarified that the state has no intention to sell additional shares of the bank, emphasizing its commitment to maintaining Commerzbank’s independence. This decision serves as a clear indication that Berlin does not support the takeover of Germany’s second-largest lender.

The move by UniCredit to acquire shares of Commerzbank had taken Berlin by surprise, sparking opposition from labor unions and raising concerns within Commerzbank about potential job cuts and a decrease in lending to small and medium-sized enterprises.

Commerzbank is critical to the German economy, serving over 25,000 business clients and accounting for nearly a third of the country’s foreign trade payments. The bank employs more than 42,000 people, highlighting its significant role in the economic landscape.

Given the government’s substantial stake, it is anticipated to have a pivotal influence in any future discussions regarding a merger. The current stance of the German government is a crucial factor in the ongoing discussions about a potential merger.