UniCredit’s Commerzbank Bid is a Test for Governments, not Markets
Europe’s banking union ambitions hinge on whether politics allows cross-border consolidation to proceed. A commentary by Ignazio Angeloni, and Marco Pagano
IEP@BU does not express opinions of its own. The opinions expressed in this publication are those of the authors. Any errors or omissions are the responsibility of the authors.
As the days pass, UniCredit’s 15 March offer to Commerzbank shareholders—an exchange of one share for 0.485 UniCredit shares—looks increasingly unlike a conventional takeover bid. Typically, once an offer is launched, markets decide: shareholders assess its merits and determine its success. Not this time.
The modest 4 per cent premium over pre-announcement prices was unconvincing from the outset and has since narrowed further. Political and labour opposition has also been swift and visible, with protests in Frankfurt underscoring the resistance.
More than a proposal to investors, UniCredit CEO Andrea Orcel’s move reads as a direct appeal to governments.
While the deal is formally on the table, the real obstacles are political and systemic. The issue now extends well beyond shareholders and management to the broader public interest.
It touches on a European banking system that, despite repaired balance sheets, still struggles to scale and compete—and intersects with the unfinished project of a Savings and Investment Union.
Italian and German banking systems share structural features that are both strengths and constraints: high levels of savings, a strong presence of small and medium-sized enterprises, and relatively low market concentration.
While these traits limit global competitiveness, they also increase the potential gains from consolidation. Cross-border mergers could help close the scale gap that continues to weigh on European banks.
At the same time, capital markets in both countries remain underdeveloped. Savings are still largely channelled into simple instruments such as bank deposits, while financial literacy and professional asset management remain limited.
Regulatory frameworks often discourage cross-border expansion and capital mobility, as national authorities seek to retain domestic savings and facilitate sovereign debt placement. Even securitisation—an important driver of capital market development elsewhere—remains constrained.
Addressing these weaknesses requires action on two fronts: fostering bank consolidation and international expansion, while simultaneously strengthening Europe’s financial market infrastructure. A coherent strategy should proceed along four complementary lines.
First, banking activity within the euro area should be made fully equivalent to domestic operations, removing remaining barriers to cross-border activity. The “country-blind” supervisory model proposed in the Draghi report points in this direction.
Second, policymakers should move away from promoting national champions and instead support the emergence of pan-European banking groups. The UniCredit-Commerzbank case carries clear signalling value, particularly in a context of rising geopolitical tensions that call for greater European autonomy and competitiveness.
Third, private and pension savings should be mobilised to support capital markets, through instruments and incentives that encourage equity investment—drawing on models such as Sweden’s. These funds could be channelled into a European investment pool accessible to both public and private actors.
Fourth, securitisation should be revived. Despite its association with the financial crisis, it can serve as a powerful engine for capital market development if properly regulated and supported by adequate liquidity mechanisms.
Reform of Europe’s financial system is already under way.
The European Commission’s initiatives on the Savings and Investment Union aim to deepen capital markets by leveraging the role of banks.
In this context, Orcel’s move should be understood as a call to action: an invitation for governments and European authorities to remove the remaining barriers to integration and unlock the growth potential of Europe’s financial system.
A previous version of this article was published in the Italian daily MF - Milano Finanza
