(Bloomberg) -- UniCredit SpA’s approach to Commerzbank AG will show how integrated Europe really is, Chief Executive Officer Andrea Orcel said in response to opposition from the German government.
The potential acquisition of a German lender by an Italian one “is a test case for Europe,” Orcel said at a conference on Wednesday. A deal would demonstrate that “we can come together and create a stronger bank.”
UniCredit rapidly built up a big stake in Commerzbank earlier this month, saying a full takeover is an option. But the German government has condemned the move as “unfriendly,” signaling it prefers Commerzbank — which is an important source of funding for the domestic economy — to stay independent.
The stance in Berlin in turn has annoyed officials in the Italian government, Bloomberg has reported. Italian Foreign Minister Antonio Tajani has suggested double standards are at play, saying “when someone comes to buy in Italy, they say that we are in a European system — then if an Italian buys, it is no longer a single market.”
“Germany now stands accused of favoring European banking integration only on its own terms,” David Marsh, chairman of the think tank OMFIF, wrote in an commentary on the group’s website. “Europe’s premier economy appears to be seeking to hide behind protectionist barriers when one of its own institutions becomes a target.”
Chancellor Olaf Scholz, especially in his role as finance minister in the previous government, has frequently called for more cross-border activity in European banking, including through joint deposit insurance, Marsh said in the post.
Some EU officials and regulators have long been advocates of banking consolidation as a way to boost the industry’s profitability and make it more competitive globally. However, banking executives have often complained that the continent’s fragmented markets mean cross-border mergers are impractical.
Former European Central Bank President Mario Draghi earlier this month called for greater integration of the European Union’s capital markets, warning that the bloc “must genuinely fear for our self-preservation” if progress isn’t achieved.
The events are “a watershed for Germany and Europe” and “whatever happens next, the episode marks another huge test for” Scholz, Marsh said.
(Updates with UniCredit CEO comment from first paragraph.)
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