Ahead of the Meeting with Unicredit: Klingbeil Should Keep the Next Financial Crisis in Mind
The federal governments have not handled the likely takeover of Commerzbank by Unicredit well so far. Now Federal Finance Minister Klingbeil must avoid further missteps.
The likely impending takeover of Commerzbank by Unicredit has so far been a story of missed opportunities for the government. Now, on September 14, Federal Finance Minister Lars Klingbeil (SPD) will meet with Andrea Orcel. Will the federal government act in a well-considered manner toward the head of the Italian bank this time? So far, it has appeared ill-prepared in at least two instances.
As right as it was two years ago to finally begin selling the government’s shares in the long-since-restructured Commerzbank, it was just as wrong not to have sought out buyers beforehand. The EU’s requirements for a non-discriminatory sale could have been interpreted more flexibly. Yet, surprisingly, the government did not sell its shares widely on the stock exchange. Its entire 4.5 percent offering went to just one bidder: Unicredit. In doing so, the traffic-light coalition government opened the door for Unicredit.
The Italian bank then skillfully exploited loopholes in German takeover law. The fact that Unicredit, through the ploy of an early voluntary exchange offer, does not have to pay a premium over the stock market price to gain control of Commerzbank reveals flaws in the design of the capital markets. As Klingbeil now negotiates the future banking business with Orcel, it is essential to avoid further oversights.
Of course, the minister should advocate for Commerzbank employees and small- and medium-sized business customers. But Klingbeil should also already be thinking about the next financial crisis. After all, a major bank is emerging that, if push comes to shove, would once again have to be bailed out (as Commerzbank was in the winter of 2008–2009) with billions in taxpayer money. Klingbeil should keep the HVB in Munich in mind. Unicredit acquired that bank in 2006, and two-thirds of the jobs were eliminated. More seriously, Unicredit transferred capital from Munich to Milan—completely legally. With less equity capital, the risk grows that a bank will be left with nothing in the event of a financial crisis.
Klingbeil must ask himself: Who is liable for the hundreds of billions in deposits held by Commerzbank savers? And who will extend credit in a crisis? Klingbeil should use the government’s remaining 12.7 percent stake to permanently secure a strong capital and liquidity base for Commerzbank from Orcel.