Takeover Talk

Swiss giant joins hunt for Commerzbank

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A potential Swiss bid stoked speculation of a Commerzbank takeover. Source: Reuters

The vultures are circling, making Commerzbank look more than ever like a dead man walking. A Swiss daily reported that banking giant UBS has formed a team to pick over the parts of the German institution that might be worth bidding for. But, the report in Neue Zürcher Zeitung emphasized, the Swiss bank has no interest in taking over Commerzbank as a whole.

It has come to that. Amid speculation that Germany’s second-largest private sector bank is in play, potential bidders are no longer looking at the bank as a whole, but only the parts that are still viable. After decades of repeated rescues and overhauls – most recently by the German government in the wake of the financial crisis – a bank that seems to have no place in globalized finance may not be long for this world.

US private equity fund Cerberus took a stake earlier this month in Deutsche Bank, prompting speculation that the activist investor might push Germany’s largest bank to merge with Commerzbank, where Cerberus is also a major shareholder after announcing a 5-percent stake in August. Previous reports that BNP Paribas was interested in acquiring Commerzbank were denied earlier this month by Jean Lemierre, chairman of the French bank.

German analysts and politicians downplay the notion that anything will happen soon with German banks.

The NZZ report led to a brief spike in Commerzbank shares, before the stock closed virtually unchanged at €12.09 ($14.40). What lent credence to the story was that Martin Blessing, who was chief executive of Commerzbank until April of last year, is now at UBS as head of personal and corporate banking as well as Swiss operations.

Mr. Blessing is from a distinguished banking family – his father Werner Blessing was a management board member at Deutsche and his grandfather Karl Blessing was longtime president of the German central bank, the Bundesbank. With this pedigree and eight years at the head of Commerzbank, Martin Blessing is intimately acquainted not only with the bank but the entire German financial scene. Moreover, Axel Weber, board chairman at UBS, was president of the Bundesbank from 2004 to 2011 and had a hand in the 2008 bailout of Commerzbank.

UBS declined to comment on the newspaper report. Analysts noted that Commerzbank does not fit well with the Swiss bank’s current focus on wealth management, which is not a strength at the German bank.

As the quick stock market reaction showed, however, investors remain nervous about the role of activist investors, many of them US hedge funds, in pushing management toward corporate restructurings, the sale or spinoff of whole divisions, and even full-scale mergers. Activist Insight, an information service, reported that there 40 activist campaigns last year targeting European companies, up from just six in 2009.

German analysts and politicians downplay the notion that anything will happen soon with German banks. Gerhard Schick, finance expert with the Greens environmental party, says it is clear that financial investors have an interest in the German banking market, but considers a merger between Deutsche and Commerzbank as “hardly plausible.” Deutsche is preoccupied with absorbing its Postbank retail unit and Commerzbank is working off bad loans and looking for a market niche.

But the fate of the ailing German bank may not rest in the hands of Germans. Italy’s Unicredit is also reportedly interested in Commerzbank. The US financial investors are not known for their patience and events may overtake the timetable of cautious German managers.

Handelsblatt reporters Yasmin Osman, Anke Rezmer and Martin Greive contributed to this report. Darrell Delamaide is a writer and editor for Handelsblatt Global in Washington, DC. To contact the author: d.delamaide@extern.handelsblatt.com.

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