The German government has reacted negatively to the idea of Commerzbank being acquired by the Italian financial giant UniCredit for several reasons. The first and most practical reason concerns internal political calculations, particularly with regard to upcoming elections in the state of Brandenburg.

If the far-right AfD party had won the elections there, it could have destabilized the government of Chancellor Olaf Scholz. Therefore, the protectionist statements from the Chancellor were clearly aimed at preventing any additional support for the AfD, which traditionally opposes foreign takeovers of national companies.

Mario Draghi's Move Annoys Germany

Additionally, the German government was irritated that the takeover announcement coincided with the presentation of a competition report commissioned by European Commission President Ursula von der Leyen and conducted by Mario Draghi, the former ECB chief and ex-Italian Prime Minister. Draghi has long advocated for cross-border mergers between European firms.

The fact that this deal appeared to receive the implicit endorsement of the former ECB president undoubtedly caused discomfort within the German cabinet. This unease was further compounded when Jens Weidmann, a longtime critic of Draghi during their time on the ECB Governing Council and now Chairman of Commerzbank’s Supervisory Board, publicly expressed support for the deal.

Allianz Supports Andrea Orcel

Weidmann isn’t the only one in Germany backing this merger. Allianz, the insurance giant and a long-term partner of UniCredit with a stake of nearly 3 percent, is firmly in support of UniCredit CEO Andrea Orcel.

Allianz has had a strong presence in Italy for decades, ever since it acquired RAS, holding a significant market share in the country which it aims to expand further.

Strong Incentives for Italian Insurers

Giacomo Campora, CEO of Allianz Italy, recently stated during a Q&A session at the 2023 annual results conference that the company has great confidence in Italy. Over the past ten years, Allianz has completed four transactions in the country, achieving a 12 percent market share in the non-life insurance sector.

For the global insurance industry, Italy has become increasingly attractive, as it remains an underinsured market. Recent data shows that Italy has a significant insurance gap, with penetration levels 4.6 percent below the OECD average in life insurance and 4.9 percent in non-life insurance. This gap presents a clear incentive for foreign insurers to expand their presence in Italy.

A «National Focus» Rather Than a Cross-Border Deal

Many industry observers consider the potential acquisition of Commerzbank by UniCredit as more of a national merger than a cross-border transaction. UniCredit has owned Germany’s HypoVereinsbank (HVB) for nearly two decades, so the deal may be seen as consolidating its existing footprint in Germany. Even experienced bankers like Alberto Nagel, CEO of Italy's Mediobanca, share this view.

Speaking at a recent «Bloomberg» event in Milan, Nagel explained that the merger between UniCredit and Commerzbank shouldn’t be classified as a cross-border transaction but rather as a «eine national focus». He added that this perspective could lead to significantly more synergies, particularly with HVB, than typically expected from cross-border deals.