Merz Softens His Line as Commerzbank Faces the Next Phase of the UniCredit Fight

Commerzbank’s long-running takeover saga is moving from a rejection story to a question of execution. On 16 July 2026, Chancellor Friedrich Merz signalled that his government would not stand in the way of a merger with UniCredit, a notable shift after months of Berlin insisting on the Frankfurt lender’s independence. At the same time, S&P cut its outlook on Commerzbank from positive to stable. The shares finished the day 0.37 percent lower at EUR 37.89.

The political message was more nuanced than a simple green light. Merz said the federal government could not formally block the transaction anyway, because UniCredit does not need Berlin’s approval for the combination. He also criticised the way UniCredit chief executive Andrea Orcel had gone about the push, describing the approach as aggressive in a separate report cited by the bank’s critics. Still, the chancellor made clear that questions about the future business model of a merged lender are legitimate. The German state remains a major shareholder with around 12 percent, behind UniCredit. According to people close to the talks, UniCredit plans to submit a formal takeover application to the European Commission in September.

That step would come after a tender process that fell well short of transforming the Italian bank into a majority owner. UniCredit said only 17.60 percent of shares were tendered in its offer, and among independent institutional and private investors the acceptance rate was below 2 percent. Earlier in June, internal shareholding analysis had already shown that not a single institutional investor had accepted the proposal. Even so, UniCredit’s total position — including existing holdings and cash-settled derivatives — was at one point estimated at about 47.6 percent of the shares, or 49.65 percent of voting rights, leaving it still short of control. A separate source close to the process said the acceptance rate stood at 17.6 percent, underscoring that the Italian group was not yet at a majority of voting rights.

S&P’s move added a second layer to the market’s reading of the situation. The agency affirmed Commerzbank’s long-term rating at A and its short-term rating at A-1, but lowered the outlook from positive to stable. The reasoning was straightforward: S&P now sees an integration of Commerzbank into UniCredit as more likely. UniCredit, by contrast, continues to carry a positive outlook from the agency, suggesting S&P still views it as the more likely beneficiary of any consolidation.

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The shift in sentiment was not confined to ratings and politics. Jefferies Financial Group also adjusted its disclosure on Commerzbank. In a notification under German securities law dated 14 July 2026, the firm said it held 2.50 percent directly through just over 28.2 million shares and another 7.41 percent via financial instruments, for a total of 9.91 percent. The previous filing had shown 10.43 percent, a modest reduction in exposure as positions around the takeover contest continue to move around.

For now, the share price remains close to the top of its recent range rather than breaking down on the news flow. At EUR 37.89, the stock was just 3.29 percent below the 52-week high of EUR 39.18 reached only days earlier. Over the past 12 months, it is still up 33.56 percent. That performance reflects how much of the takeover premium had already been priced in, even after a day that mixed a softer stance from Berlin with a weaker rating outlook and a tepid market response.

Commerzbank is also trying to keep attention on what it can control. The bank’s management said after the tender period ended that it intends to push ahead with its “Momentum 2030” strategy and create value for stakeholders on its own. Shareholders have already backed that message through capital returns: the May annual meeting approved a dividend of EUR 1.10 per share for the 2025 financial year, almost double the EUR 0.65 paid for the previous year. It also authorised buybacks of up to 10 percent of share capital. The prior 2026/I repurchase programme was completed in March, with the bank buying back just over 15.6 million shares, or about 1.39 percent of share capital, for a total of EUR 524 million.

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Operationally, Commerzbank is also leaning into technology. In early July it announced expanded AI partnerships with Google and Microsoft, including the use of Gemini Enterprise and the integration of Microsoft 365 Copilot to streamline internal processes. Deutsche Bank, meanwhile, reaffirmed its Buy rating in a mid-July research note.

The next major test arrives on 6 August, when Commerzbank is due to publish second-quarter and first-half 2026 results. After a failed tender, a downgrade in outlook and a shift in tone from the chancellor, investors will be watching closely to see whether the bank’s standalone strategy can still carry the valuation that has kept the shares near their highs.

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