Commerzbank Board Member Stefan Wittmann Warns of Potential Job Cuts as UniCredit Pushes for Hostile Takeover of the German Lender
Fiona Nanna, ForeMedia News
5 minutes read. Updated 8:51AM GMT Tue, 24 September, 2024
In a startling revelation that raises alarms within the European banking sector, a supervisory board member of Commerzbank has cautioned that a hostile takeover attempt by Italian lender UniCredit could result in a staggering loss of two-thirds of jobs at the German bank. This warning comes amidst escalating tensions and significant shifts in the landscape of European finance.
Stefan Wittmann, who also holds a prominent position in the German trade union Verdi, conveyed his concerns during an interview with CNBC’s Annette Weisbach. He expressed hope that Commerzbank could circumvent a hostile takeover, emphasizing that the bank’s board has formally requested the German government conduct an internal review of the situation. This review, he hopes, could provide Commerzbank with a crucial six-month window to assess its options.
Wittmann articulated, “If a hostile takeover is unavoidable, we anticipate that two-thirds of jobs will disappear, along with a significant reduction in branches.” He further noted that UniCredit appears selective in its customer base, suggesting that the Italian bank would primarily target affluent clients, neglecting the broader Commerzbank customer demographic.
The stakes are high, particularly considering that the German government remains a significant stakeholder in Commerzbank, having previously injected €18.2 billion (approximately $20.2 billion) into the institution during the 2008 financial crisis. As discussions unfold, Berlin’s role could prove pivotal in shaping the future of the merger between these two banking giants.
Wittmann underscored the unions’ concerns regarding workforce stability, stating, “We are genuinely focused on our economic and industrial responsibility. Unfortunately, in any merger scenario, employees are often the ones who suffer the most.” Despite attempts to reach out for further comment, Commerzbank has yet to respond to Wittmann’s statements.
The urgency of the situation intensified this past Monday, when UniCredit disclosed it had increased its stake in Commerzbank to approximately 21%. The Italian lender also submitted a request to raise its holdings to 29.9%, signaling a potential takeover bid. Earlier in the month, UniCredit acquired a 9% stake in Commerzbank, half of which was obtained from the German government.
In a stark counterpoint to UniCredit’s strategy, German Chancellor Olaf Scholz expressed disapproval of the Italian bank’s aggressive maneuvers. He remarked, “Unfriendly attacks, such as hostile takeovers, are detrimental to the banking sector, and the German government has clearly positioned itself against such actions.”
Tension and Uncertainty
As Commerzbank’s supervisory board convenes this week to deliberate on UniCredit’s escalating stake, the mood within the company is described as “very tense.” Wittmann conveyed surprise at UniCredit’s sudden shift in strategy, characterizing it as a “180-degree turn within 48 hours.” He recalled how UniCredit CEO Andrea Orcel had recently indicated a preference for a cooperative takeover approach, only to pivot to a hostile stance shortly thereafter.
Wittmann raised critical concerns regarding the implications of a merger without a robust banking union in Europe. He noted that UniCredit’s significant exposure to Italian government bonds poses further risks, especially amid geopolitical tensions that could limit the bank’s capital availability to support Commerzbank’s operations.
In response to the financial crisis of 2008, the European Commission proposed a banking union aimed at enhancing the regulation and oversight of banks across Europe. However, significant hurdles remain. Economist and former European Central Bank Governor Mario Draghi has highlighted these regulatory challenges, which he asserts hinder the capacity of European banks to lend competitively.
Wittmann concluded with a call for cautious consideration of any merger activity: “We have always advocated for mergers at the European level, but only when a banking union is established. It is essential to set the rules of the game and the guardrails first before proceeding with such significant changes in our industry.”
