(Aug 1): Bettina Orlopp has about a week to prepare for a call that will set the stage for discussions about Commerzbank AG’s fate, and ultimately hers.

Shortly after presenting second-quarter results in early August, the chief executive officer is scheduled to dial into a video conference with UniCredit executives. The meeting is expected to kick off negotiations, potentially lasting months, about how much the German lender should change once the Italian rival under CEO Andrea Orcel controls it.

For two years, the two leaders have been locked in an increasingly hostile takeover battle, with Orlopp, a low-profile former consultant, keeping the confident dealmaker Orcel at arm’s length. But after the Italian managed to secure almost half of Commerzbank’s shares with a lowball tender offer, the tables are turned. 

Orcel, who has threatened to oust Commerzbank’s management, is expected to eventually demand sweeping changes, including cuts across its international network and back office. Orlopp is tasked with safeguarding the interests of other stakeholders as well, including the German government, as UniCredit seeks to parlay its large minority holding into control. 

“Andrea and I both seek to maximise shareholder value. That’s a good basis for talks,” Orlopp, 56, said in response to questions from Bloomberg. “My base case is that we will ultimately find a friendly solution.”

This story is based on conversations with people familiar with both companies and their leaders. Orlopp declined to comment on her priorities for any upcoming discussions or confirm a schedule for talks. A representative for UniCredit declined to comment.

A full takeover of Commerzbank would mark Europe’s biggest bank deal in about two decades and turn the Italian lender into a dominant force in Germany, while also boosting its presence in Poland. It would also take Europe a step closer to its goal of cross-border consolidation, even though UniCredit would combine Commerzbank with its existing German unit HVB in an effectively domestic transaction. 

For the Commerzbank CEO, it’s mission impossible all over again. Two years ago, she was on the way back from New York when UniCredit made the surprise announcement that it had bought into the German rival. Orlopp’s mobile phone was flooded with messages when she switched it back on after the flight.

Only a few days earlier, Commerzbank’s then-finance chief had agreed to become the next CEO, though the announcement was still under wraps. Her predecessor, Manfred Knof, had decided to step down ahead of time. It later turned out that Knof held a meeting at his home with Orcel in September of 2024 to informally discuss UniCredit’s interest, people familiar with the matter have said. 

Orlopp stepped in to lead the defence against the much larger rival, pledging that she wouldn’t resort to “stupid things” like poison pills that would hurt shareholders. She revamped Commerzbank’s strategy several times, boosting profitability and shareholder payouts. The shares surged, bolstered by the measures and by UniCredit’s interest. 

The prospect of losing Commerzbank’s independence helped her galvanise stakeholders and shore up employee support even as she accelerated cost cuts. The stock has more than doubled during her tenure, outpacing the average increase for the wider industry including UniCredit and giving it a market value of about €40 billion (RM188.02 billion).

For a while, the strategy seemed to work, with Orcel saying about a year ago that Commerzbank had become too expensive to make a bid. When the stock kept rallying, he eventually changed his mind and announced an all-out offer in March in an effort to break the stalemate.

While the bid included virtually no premium, UniCredit still managed to obtain almost 18% of the shares, taking its stake to just under 50% when including derivatives and the impact of a share buyback. That holding will likely give Orcel a majority at investor meetings, where usually not all shareholders exercise their voting rights, and enable him to push through some change.

There’s disagreement between UniCredit and Commerzbank what exactly the Italian lender can achieve with its future stake. Orcel has said he’ll be able to replace management and implement his strategic vision for the lender. Commerzbank has argued he’ll need a 75% majority for many of the things he wants to achieve, especially if the rest of the shareholders, management and staff are opposed to the plans. 

“The current situation is unsatisfactory for everyone because UniCredit will still need a domination agreement or even squeeze-out to fully control Commerzbank,” Orlopp said. “I need to ensure that the 50% of shareholders who did not tender into the offer still get their fair share.”

The strong uptake of UniCredit’s bid surprised many observers including Orlopp, who privately blames the vagaries of German takeover law for giving a prospective buyer wide latitude to use derivatives in their approach, according to people familiar with the matter. Commerzbank has said it believes that most tendered shares came from UniCredit counterparties whose economic rationale to accept wasn’t the deal’s attractiveness.

UniCredit has dismissed Commerzbank’s claims, with each side accusing the other of spreading misleading information. 

“Even though we would have preferred things to be different, the balance of power at the next annual general meeting is clear,” Commerzbank chairman Jens Weidmann said in a recent statement. “The priority now is to hold constructive discussions.”

One of Orlopp’s key goals in those coming talks will be to mitigate the future cuts to the bank’s global operations, which she has publicly defended against as integral to Commerzbank’s value proposition. Another priority is preserving the lender’s separate stock exchange listing, according to people familiar with the matter, given that a majority of shareholders including the government haven’t tendered.

By contrast, UniCredit’s plans for the retail division and changes to the back office align more closely with Orlopp’s own assessment of how to create value, the people said. Orcel has proposed cutting thousands of jobs at Commerzbank, with one focus on group functions. Orlopp herself in May outlined some 3,000 job cuts to help double profit by 2030.

Extracting potentially costly concessions from UniCredit will be an uphill battle as Orcel has pledged to achieve €1.4 billion in cost savings once he’s in control. He is also still irritated by Commerzbank’s campaign during the tender offer, according to people familiar with his thinking. The German bank, in turn, was irked when UniCredit posted ads on social media that, according to regulator Bafin, were “sensationalist and misleading in nature”. The Italian bank took down the posts.

A previous round of meetings between Orlopp and Orcel only ended up deepening their divisions. Both executives came away from the talks this year feeling that the other side hadn’t been sincere about finding an agreement, according to other people familiar with the matter.

People who know her say Orlopp, a former McKinsey & Co consultant with a doctorate degree from the University of Regensburg, is analytical and prefers to build consensus over confrontation. They say she’s always calm and polite, deeply pragmatic and willing to accept uncomfortable facts. She very rarely speaks about herself, instead focusing discussions on the institution and its stakeholders.

Having joined Commerzbank 12 years ago to run its strategy unit, she was soon promoted to the management board to oversee human resources and legal before becoming chief financial officer in 2020. Four years later she became the first female CEO in Commerzbank’s 156-year history and one of just a few women running a German bluechip company.  

In theory, Orcel could cut short any negotiations with Orlopp and instead call for a shareholder meeting to replace Commerzbank’s supervisory board, once UniCredit has taken ownership of the shares. The new board could then name a new management more open to his ideas. 

Such a move, however, is certain to irritate Berlin. The German government still owns more than 12% of Commerzbank and currently has two of the 20 seats on the board. Employee representatives have 10 seats. UniCredit would likely have to take over the government’s two seats to control the lender.

Both the government and employees are backing Orlopp, her biggest bargaining chip in the discussions. Berlin has said both banks should talk with each other, instead of seeking discussions with the government as Orcel wants. The administration under Friedrich Merz was previously opposed to a deal, but has recently softened its stance, Bloomberg has reported.

Agreement with Orlopp would also help Orcel overcome resistance among Commerzbank staff, and ease concern among some corporate clients about the future of their banking relationship, the people familiar said. It could also help defuse resistance from minority shareholders.

UniCredit currently plans to run Commerzbank as a standalone entity for at least two years after achieving control, before potentially seeking to merge it with HVB.

Should Orlopp ultimately leave Commerzbank, she’ll likely be a coveted executive. Alternatively, she could just sit back and watch how the lender she used to oversee will gradually become more Italian, perhaps from the comfort of her house in the Southern European country, not far from UniCredit’s headquarters in Milan. 

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