ECB likely to approve Commerzbank takeover despite reservations

The European Central Bank (ECB) appears poised to approve Italian bank UniCredit's takeover of Germany's Commerzbank, according to a confidential Reuters report. Although the ECB has "no reason for rejection," the document highlights anticipated "challenging and lengthy" integration challenges.

Commerzbank employees protested the planned takeover in May. UniCredit secured a 48% stake in the Frankfurt-based bank through a surprising share-swap offer, facing strong opposition from Commerzbank's management. The ECB's preliminary assessment, discussed in June, acknowledges UniCredit had not submitted all necessary documents at that time, though an insider reports they have since provided the data.

The German financial regulator BaFin has voiced significant criticism, describing UniCredit's behavior during the takeover negotiations as "aggressive and partly opaque." BaFin insists UniCredit needs a credible strategy to mend relations with Commerzbank's management, staff, employee representatives, and politicians. The regulator also pointed to "known weaknesses" within UniCredit, urging a strengthening of its administrative board.

Despite BaFin's concerns, the ECB largely agrees with the assessments but does not see them as grounds to block the transaction. The central bank views cross-border bank mergers as beneficial for strengthening the EU's single market. The final review by the ECB is scheduled for September or October, with its approval considered the biggest hurdle for UniCredit.