Germany to keep Commerzbank stake as lender pursues independence By Reuters

By Tom Sims and Christian Kraemer

FRANKFURT (Reuters) – Germany will stop selling shares in Commerzbank ( ETR: ) for now and the bank’s strategy is “independence-oriented”, the country’s Finance Agency said on Friday, in the clearest sign yet that the government does not want . they are currently in favor of taking over the nation’s second largest lender.

The statement comes days after Italian bank UniCredit announced it had bought a 9% stake in Commerzbank to become its second-largest shareholder, and chief executive Andrea Orcel signaled its merger ambitions.

But UniCredit’s move – a business named “Flash” after Orcel’s dog – took Berlin by surprise and triggered union opposition and a defensive strategy by Commerzbank.

The German government, which still owns 12 percent of Commerzbank after selling 4.5 percent of its shares to UniCredit, would play a key role in setting up a deal.

However, in the past week, trade unions and Commerzbank management have called on the government to delay any further share sales.

The Finance Agency, which is part of the German Finance Ministry and manages government holdings, said a committee meeting of government officials on Friday decided it would “not sell, until further notice, any further shares”.

UniCredit declined to comment. A Commerzbank spokesman said the bank has a strategy that works.

“Commerzbank is a stable and profitable institute. The bank’s strategy is oriented towards independence. The federal government will accompany this until a new order, maintaining its stake,” the agency said.

Orcel said it wants to start talks on a merger it says would “create a much stronger competitor” in Germany. His gambit comes after years of calls for Europe to improve its banks’ competitiveness against larger US and Asian rivals.

They face great obstacles.

Cross-border European banking transactions have been hampered by factors including years of weak profitability that have left lenders too weak to attempt tie-ups. And regulatory barriers to the free movement of resources across borders have been strengthened by politicians’ preference for domestic “champions”.

A turnaround of UniCredit has overcome one of the hurdles. The bank, unlike rivals, has the financial firepower for a bold combination, having reaped extraordinary returns.

But domestic politics will be the hard part, and some investors have warned that cross-border transactions remain difficult.

Anke Reingen, banking analyst at RBC, said UniCredit is now unlikely to make a takeover bid anytime soon.

“We don’t think a deal is off the table forever, but any move is likely to be later than we originally expected,” she said.

Friday’s announcement means the German government’s plan is now to keep its Commerzbank shares beyond the 90-day lockup agreed upon when the shares were sold last week, according to a person familiar with the discussions.