(Dec 18): UniCredit SpA increased its holding in Commerzbank AG to about 28%, ratcheting up chief executive officer Andrea Orcel’s pursuit of the German lender.

UniCredit has entered into additional instruments relating to Commerzbank shares, the Milan-based lender said in a statement on Wednesday. The stake now consists of 9.5% direct ownership and about 18.5% through derivatives, it said.

The increased holding in Commerzbank, up from about 21%, indicates that Orcel hasn’t given up on his ambitions to buy the lender despite a backlash from the German government. The UniCredit CEO recently said that the likelihood of a deal has decreased since he first floated the idea, and a sale of the stake is possible.

Commerzbank’s shares rose as much as 4.3% in early trading in Frankfurt.

UniCredit’s position on a potential bid for Commerzbank hasn’t changed, with Orcel waiting for the outcome of German federal elections in February before taking any decision on the investment, people familiar with the matter said. Orcel said last month he’s got a year to make a decision on what to do with the Commerzbank stake, and he’s going to try to convince the German government of the benefits of a deal.

The expanded holding also comes while Orcel is angling for an acquisition in his home market by making an unsolicited takeover bid for domestic rival Banco BPM SpA, a move which would create Italy’s biggest lender. Banco BPM is exploring options to fend off the takeover attempt, Bloomberg News has reported.

Orcel’s latest Commerzbank move “reinforces UniCredit’s view that substantial value exists within Commerzbank that needs to be crystallised,” the Italian bank said in the statement. “The position remains at this time solely an investment and does not have any impact on the public exchange offer with Banco BPM.”

The current German government has said it’s against a takeover of Commerzbank by UniCredit. The country is headed for federal elections in February which are likely to see a new administration take over, though the conservative candidate for head of government, Friedrich Merz, has also voiced opposition to a potential deal.

UniCredit has been increasing its stake in Commerzbank in various steps since first disclosing it in September, with much of that through instruments such as total return swaps. That has enabled UniCredit to control voting rights in the German lender without having formal permission from the European Central Bank to exceed a 10% holding.

UniCredit said that talks with the authorities are ongoing in relation to approving a stake of as much as 29.9%. Commerzbank declined to comment on the increased holding.

The way how Orcel has amassed the Commerzbank stake has led to frustration within the German government, which owns 12% in the lender. Commerzbank labour representatives have criticised the used methods as well.

Uploaded by Magessan Varatharaja