Germany's largest bank is reportedly thinking about how to respond to last week's announcement by Italy's UniCredit that it had bought 9 per cent of Frankfurt-listed rival Commerzbank.

Deutsche Bank is reportedly looking at ways to make it harder for Italy’s UniCredit to buy German rival Commerzbank and thereby build a large domestic competitor.

Bloomberg reported yesterday that Deutsche’s CEO Christian Sewing and his colleagues have explored ideas such as buying part or all of the German government’s remaining 12 per cent stake in Commerzbank. (The stake is a legacy of when the German state bailed the bank out in the 2008 global financial crash.)

Shares in Commerzbank are about 26 per cent above their level on 11 September when UniCredit revealed that it had bought a 9 per cent chunk of the bank. Shares were last seen trading at €15.6 ($17.4) per share.

At stake is the competitive shape of Germany’s banking sector, which at the moment has Deutsche in top position. Commerzbank is the second-largest listed bank. It provides services including private lending; UniCredit also has private banking and wealth management services. 

On 11 September, UniCredit said: “UniCredit is supportive of Commerzbank AG's management board and supervisory board and the progress that they have made in improving the bank's performance.” On the same day, Commerzbank said the acquisition was “testament to the progress made and the position of Commerzbank.”

The story points to how Germany’s banking sector, comprising a handful of big names such as Deutsche and Commerzbank, and a long tail of smaller organisations, is arguably ripe for consolidation, while authorities may want to see competition. 

In February this year, Sewing appeared to quash unconfirmed reports that Deutsche was talking to Commerzbank about a merger. The banks had been in merger talks in 2019, but they came to an end.

In its 16 September article, the Bloomberg report said Frankfurt-listed Deutsche is opposed to a takeover of Commerzbank. Deutsche may not act in response to a possible UniCredit purchase of Commerzbank.

The report quoted a Deutsche spokesperson who pointed to a comment made at a conference a fortnight ago where the CEO said he was focused on the lender’s profitability when asked about plans by the German government to sell down its remaining stake in Commerzbank.

Last week, as it revealed its stake, UniCredit CEO Andrea Orcel was quoted saying he was open to the idea of a full takeover – surprising the German government.