By Valentina Za and Tom Sims
MILAN (Reuters) -An Italian court will hear on Wednesday an appeal by UniCredit against government conditions hampering its $17 billion bid for Banco BPM, a day after it tightened its grip on another target – Germany’s Commerzbank.
The acquisition-hungry lender has asked the court to annul the conditions set by Rome in April, saying they would be detrimental to the sound management of the combined bank.
The court will decide later on Wednesday, but it is not expected to publish its decision before Thursday at the earliest.
Meanwhile, UniCredit said late Tuesday it had doubled its equity and voting stake in Commerzbank to around 20% by converting derivative contracts worth around 10% of the bank’s capital. It also plans to convert the remaining 9% it holds in derivatives in due time.
The deputy chair of Commerzbank’s supervisory board, Sascha Uebel, said UniCredit’s move was not a surprise, but only hardened his opposition to a takeover.
“It doesn’t change my opinion, except that I’m perhaps a little more determined than last week.” he told Reuters.
UniCredit CEO Andrea Orcel, whose acquisition plans have sparked angry reactions both in Rome and Berlin, has sought meetings with the new German government to discuss a possible combination of Commerzbank with UniCredit’s German unit HVB.
Italian laws give Rome special powers to block, or set terms for, deals affecting strategic assets on national security grounds. But in Germany, the government has no effective legal tools to block UniCredit’s expansion plans.
It has voiced strong opposition, however, and UniCredit has said it wants support for its acquisition plans, adding it could just sell the Commerzbank stake if that doesn’t emerge.
A German finance ministry spokesperson reiterated on Wednesday that Berlin rejected UniCredit’s “uncoordinated and unfriendly” approach and that the government would not sell its remaining 12% stake in Commerzbank.
“The federal government supports Commerzbank’s strategy of independence. The federal government has already made this very clear to UniCredit,” the spokesperson said at a regular government news conference.
Orcel has secured European Central Bank approval for the Commerzbank investment and is also expected to receive support from the European Commission, which has raised concerns over Italy’s interference in banking deals.
European Union authorities are in talks with their Italian counterparts, but a formal disciplinary step to challenge Rome’s stance, paving the way for eventual possible fines, is not imminent, three people close to the matter told Reuters.
Shares in UniCredit were up 3% at 0931 GMT. Commerzbank’s were up 0.6% and Banco BPM’s up 1.9%.
After years of record profits fuelled by high interest rates, Italian banks have embraced consolidation, with almost a dozen takeover bids currently unfolding or recently concluded.
Rome has taken issue only with UniCredit’s bid for BPM, which the Treasury had hoped to combine with state-backed Monte dei Paschi di Siena.
Keen to put to use billions of euros from selling assets and cutting costs, Orcel in May doubled a stake in Greece’s Alpha Bank. UniCredit has also built a stake in Italian insurer Generali, but Orcel has said he will gradually sell it.
(Additional reporting by Giuseppe Fonte and Christian Kraemer. Editing by Edwina Gibbs and Mark Potter)
