UniCredit’s overtures do not cause fears for Germany’s Mittelstand By Reuters

By Maria Martinez

BERLIN (Reuters) – Germany’s Commerzbank ( ETR: ) says its role as a key lender to the “Mittelstand” group of mid-sized companies that run Europe’s top economy is a reason to resist proposals from UniCredit. But the Mittelstand leaders themselves are less convinced.

Italy’s UniCredit said on Monday it was preparing to increase its stake in Commerzbank to 21 percent, a move Chancellor Olaf Scholz called “an unfriendly attack.”

Officials at Germany’s two main business groups representing small and medium-sized enterprises (SMEs) instead cited the far-reaching benefits a cross-border merger could offer, echoing the arguments put forward by the Italian bank.

“This could initiate the urgently needed transformation of Commerzbank’s struggling business to make it competitive again, which would also be an advantage for German companies,” said Marc Tenbieg, managing director of the DMB association, which counts more than 27,000 small and medium enterprises. the members.

Commerzbank has highlighted rising levels of customer satisfaction among Mittelstand clients and estimates that it handles around 30% of the trade that Germany’s export-oriented companies do with the rest of the world.

But Hans-Juergen Voelz, chief economist at the 29,000-member BVMW federation – the Mittelstand’s other main business group – said commercial banks needed to grow to grow their profits and balance sheets, thereby strengthening their ability to lend .

“If in the case of Commerzbank a merger with another European banking institution contributes to this, we welcome it,” Voelz said.

UniCredit’s move has been criticized by parties across the political spectrum in Germany, although they can do little to prevent any takeover.

Friedrich Merz, the Christian Democrat opposition leader who many see as the next chancellor, noted that Commerzbank lent to about a third of Mittelstand firms and said “we have to talk about” the implications of any takeover by UniCredit.

Commerzbank is a partner for around 25,500 corporate customer groups and almost 11 million private customers and small businesses in Germany, according to its website.

According to its annual report, loans made explicitly to the small business sector in Germany in 2023 totaled around 83 billion euros ($93 billion).

Members of its supervisory board on Tuesday voiced fierce opposition to the takeover, while local unions are worried about job cuts and moving its headquarters abroad.

WIDER DEBATE

The merger speculation comes amid a much wider European debate over the need for the region to improve its economic competitiveness against the US, China and other rivals.

A long-awaited report by former European Central Bank chief Mario Draghi last week outlined in broad terms the need to help European companies scale and called for moves towards a more uniform European banking sector.

“The larger the respective institutions, the faster projects can be financed and the larger the transactions can be in an international context,” said Volker Treier, head of foreign trade at the German Chamber of Commerce (DIHK).

Two government sources told Reuters on Tuesday that Berlin saw no legal powers it could use to prevent a takeover by UniCredit.

“Regardless of what happens now with Commerzbank, I think it’s good for the state to step back as a strong individual shareholder,” said Thomas Hoppe, chairman of Young Entrepreneurs, an association representing businesspeople under the age of 40.

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