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Bond Market News
Germany Asks UniCredit to Sell Its Commerzbank Stake
December 20, 2024
Germany asked UniCredit to sell its Commerzbank stake after the Italian bank increased its indirect stake in the latter to 28% using derivatives. The use of derivatives allows UniCredit to control voting rights without exceeding the 10% threshold set by the European Central Bank (ECB), but this has worsened relations with German authorities. UniCredit has applied for ECB approval to increase its stake in Commerzbank to 29.9%, which could be decided by February. This move has provoked German unions, politicians, including potential next Chancellor Friedrich Merz, who oppose the deal, citing risks to financing for small and medium-sized German businesses. UniCredit has stated that its investment in Commerzbank is “almost fully hedged” and denied any intention of a full takeover before Germany’s elections in February.
UniCredit’s bonds traded stable with its 4.625% 2027s at 98.7 cents on the dollar, yielding 5.22%.
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