German trade union Verdi would oppose a cross-border merger for Commerzbank even if the bidder was not an Italian bank like UniCredit, an official said on Saturday, Reuters reports.
Berlin was taken aback by UniCredit’s swoop to build a large stake in state-backed Commerzbank, a move the Italian bank says could lead to a merger.
Officials told Reuters on Friday that Germany is working to frustrate a possible takeover that could tie Berlin’s fortunes to those of heavily indebted Italy.
“(Our opposition) is not due to the fact that (the bidder) is an Italian bank. It could be French or Spanish,” Frederik Werning, a Verdi labour union official and a member of the Commerzbank Supervisory Board, said in an interview with Italian broadcaster La7.
“When a merger happens every time, they say that nothing will change but one out of two times they don’t keep their promise, and jobs would be lost both in Germany and in Italy”.
The merging banks would for at least two years be preoccupied with integration at a time when Germany needs to boost investment, Werning added.
“If the takeover happens, UniCredit and Commerzbank will have to take care of themselves for years and they will no longer be strong partners for their clients, neither in Italy nor in Germany,” he added.
At the heart of Germany’s concern is UniCredit’s 40 billion euros ($44 billion) holding of Italian government bonds.
Commerzbank, which is smaller and financially weaker than UniCredit, also has billions of euros of Italian bonds.
A European Banking Union in the making
For a decade, European leaders have aimed to strengthen cross-border banking integration under a scheme named the Banking Union.
Under the union, banks can merge with others into creating larger ones that are less dependent on their home governments within Europe.
This is critical for boosting efficiency and reducing risks. The initiative is closely tied to the EU’s Capital Markets Union, as fragmented financial markets are seen as barriers to growth.
Former ECB President Mario Draghi highlighted this issue, noting that JPMorgan Chase is worth more than Europe’s top 10 banks combined.
Proponents like Karel Lannoo of CEPS believe mergers, such as UniCredit’s interest in Commerzbank, are necessary to unlock Europe’s financial potential.
However, German Chancellor Scholz opposes the deal, concerned about foreign influence, especially after UniCredit increased its stake.
Critics like Italian MEP Irene Tinagli argue that the Banking Union seems to benefit aggressive takeover strategies, leaving other banks vulnerable.