Italy's UniCredit (CRDI.MI) defied Germany's defence of Commerzbank (CBKG.DE) by using derivative contracts on Monday to raise its potential stake in the German lender to near 21%, while waiting for regulatory approval to go above 9.9%.
UniCredit CEO Andrea Orcel's aggressive move comes after Germany's finance agency on Friday said it would not sell any more shares in Commerzbank for now, adding the bank's strategy was "geared towards independence."
"UniCredit believes that there is substantial value that can be unlocked within Commerzbank, either stand-alone or within UniCredit, for the benefit of Germany and the bank's wider stakeholders," the Italian bank said in a statement.
Commerzbank had no immediate comment.
Orcel had already taken the German government by surprise when it outbid rivals at a tender to buy 4.5% of Commerzbank from the state this month, having previously acquired a similar sized stake on the market.
The 9% stake makes it the biggest private investor in Commerzbank after the government, which still retains around 12%. With the latest purchase UniCredit would become the biggest investor if the European Central Bank approves its request.
The ECB must approve share ownership in a bank crossing thresholds set at 10%, 20%, 30% etc.
UniCredit said it had applied to increase its Commerzbank holding to 29.9%. Meanwhile it entered derivatives contracts on Monday to acquire a further 11.5% of the bank.
It would only take possession of the underlying Commerzbank shares linked to the derivatives if it secured approval.
"The physical settlement under the new financial instruments may only occur after the required approvals have been obtained," UniCredit said.
Italy's second-largest bank said it had hedged "the majority of UniCredit's economic exposure" to Commerzbank in order to be free "to either retain its shareholding, sell its participation with a floored downside, or increase the stake further."
Any decision "will depend on the outcome of engagement with Commerzbank, its management and supervisory boards as well as its wider stakeholders in Germany."
