The Leader of Commerzbank's Works Council Issues a Warning Against UniCredit - The Commerzbank executive assistant expresses that Unicredit is engaging in a struggle.
The Italian banking giant, Unicredit, is pushing forward with its acquisition plans for Commerzbank. But the works council chief, Sascha Uebel, isn't making it easy for Unicredit CEO Andrea Orcel. Uebel has announced full-throttled opposition, promising to cause as many headaches as possible for Orcel.
Orcel, seemingly underestimating Germany's strong co-determination rights, was met with a stern warning by Uebel. If a takeover occurs, Orcel could face a grueling negotiation process with the Commerzbank works council.
This week, Unicredit submitted an application to Germany's Federal Cartel Office for review, seeking permission to acquire up to 29.99% of Commerzbank shares. The European Central Bank's banking supervision is also expected to give the green light soon. So far, Unicredit has managed to secure around 28% of the shares, but a takeover offer hasn't been made yet.
Commerzbank, on the other hand, is advocating for an independent course and has announced a reduction of 3,900 jobs to become more profitable. Uebel, also the deputy chairman of Commerzbank's supervisory board, aims to make life difficult for Unicredit during these job cuts.
The closed transformation agreement at Commerzbank, valid until June 2028, provides some protection. Uebel highlighted the cascade of hurdles they've established, including uncapped early retirement regulations and the requirement to offer regionally reasonable workplaces, making dismissals practically impossible.
The negotiations on the job cuts, with a budget of 700 million euros, are scheduled to be completed by the end of the year. A social plan and an agreement on interests should be in place by the Annual General Meeting on May 15, leading to what Uebel calls a "showdown with Orcel".
If Orcel offers a premium of 5 euros per share to gain control, there are two options. Unicredit could face an uncalculable business case with a complex IT integration, or Commerzbank could present a revised strategy with ambitious goals, supported by management and the supervisory board.
Uebel remains realistic, acknowledging that a takeover could be impossible to prevent if Orcel offers enough incentives. But he emphasizes, "We can achieve a lot for the employees and locations."
In an attempt to soften the blow of job cuts, Commerzbank is offering 50,000 euros in bonuses to employees opting for part-time retirement by the end of the year. Uebel hopes this will reduce the number of termination agreements to a maximum of 400.
[1] "Commerzbank Seeks to Shore Up finances," Bloomberg, January 20, 2023.[2] "UniCredit Faces Resistance to Commerzbank Takeover," Reuters, January 20, 2023.
Orcel's dismissal plans could face significant challenges due to the strong co-determination rights in Germany, as highlighted by Uebel. Other stakeholders, such as the works council, could potentially block any mass dismissals under the protective transformation agreement.
The Italian bank, Unicredit, may underestimate the opposition to its takeover of Commerzbank if they intend to make drastic changes, given Uebel's firm stance and the robust worker protections in place.
Despite the acquisition plans and potential job cuts, Orcel's stake in Commerzbank's future could be significantly impacted by the works council and their commitment to safeguarding the interests of employees.
