The federal government is demonstrating a lack of planning and amateurism in the takeover thriller. The responsible finance minister has botched it – just like Habeck once did with the heating law.
In the long list of bankruptcies and mishaps of this federal government, the way it dealt with Commerzbank probably deserves a particularly prominent place. Various finance ministers and chancellors had a good 16 years to consider what they could do with the shares in Germany’s second-largest private bank that they had hastily purchased during the 2008 financial crisis.
A reorganization of the fragmented German banking sector would have been an option; or a cross-border merger with a strong European competitor, which would also have been an important signal for the creation of a European financial market; and also a strengthening of Germany as a financial center. The federal government once held a good 25 percent of Commerzbank, and recently it was still more than 16 percent – there was a lot that could be done with that. But none of that happened.
In their defense, it can be said that many finance ministers and chancellors had other problems to solve during their time in office, and Commerzbank and the financial sector were not that important. Moreover, due to their party affiliation, they were not as interested in re-privatization. But with the first liberal finance minister in the federal government in more than 50 years, Christian Lindner, one would have expected the finance ministry to give it some thought early on.
Lindner’s liberal principles
After all, Lindner never tired of trumpeting his liberal principles that the state had no business in a private bank: “I have always said that the state has a regulatory interest in privatizing again,” he declared just a few days before the federal government actually put a first package of 4.5 percent of the shares up for sale in a nighttime auction two weeks ago. No matter how desolate the traffic light coalition is, at least the liberal finance minister is sticking to his principles and delivering – that was Lindner’s message.
Lack of planning and amateurism
How things turned out is well known: instead of developing a perspective for Commerzbank on its own, Germany’s second-largest private bank is now a driven takeover candidate after the overnight privatization, and its future is completely uncertain. And the obvious lack of planning in the federal government is compounded by amateurism.
This uneasy feeling was already present on the morning after the auction, when the federal government openly admitted that it had been surprised by the bid made by the major Italian bank Unicredit during the night. Unicredit boss Andrea Orcel had for years more or less openly signaled his interest in joining or even merging with Commerzbank, but had always been rebuffed in Berlin. But now the Italians had not only secured the federal government’s 4.5 percent, but also 4.5 percent on the market. That was a statement – and a first disaster for Lindner.
But what did the federal government, and especially the finance minister, do? They largely disappeared. And when they resurfaced, they had a plan that didn’t last 72 hours.
Last Friday, Berlin announced that it was rejecting a takeover of Commerzbank by Unicredit and would not sell any more shares for the time being. That sounded strong and initially put the share price under pressure because the takeover fantasy was now disappearing from the price. Then on Monday of this week, the friendly response came from Milan: Thank you for the message, and by the way, we now hold 21 percent of Commerzbank. One of those involved can now look at the disaster from the outside: Commerzbank boss Manfred Knof is leaving his position at the end of the month.
Parallels to Habeck’s botched heating law
Now, dealing with a bank like Commerzbank is always a matter for the boss, i.e. the chancellor. Olaf Scholz cannot be completely absolved. But it must be said that in this case the finance minister is running the business, and financial policy and the state of the German financial market are his very own area. But the way Lindner is currently doing things, Commerzbank has the potential to be a debacle for him, just as his botched heating law was for the Green economics minister Robert Habeck a year and a half ago: a project that will permanently damage Lindner’s reputation.
Regardless of whether it is the SPD, FDP or the Greens, you don’t want a government that gives the impression that it only learns the ins and outs of office after it has started its job. Learning by doing may work for trainees, but not for the most important government jobs in the world’s third-largest economy. Lindner can count himself lucky that banks don’t offer as much bang for the tabloids as Habeck’s “heating hammer”. In addition, all parties are busy with themselves after the state elections. But the mismanagement under his leadership is breathtaking.
Commerzbank still has no prospects beyond Unicredit, and they are becoming increasingly difficult the more shares the Italians secure on the free market. To be honest, Commerzbank never had any other prospect than a merger with another, presumably stronger partner. And after Deutsche Bank, which most recently politely declined in 2019, the only banks left are in France, Spain and Italy (all countries where the banks are now in a much better position than in Germany).
Lindner could save it – and approach the Unicredit boss
If Christian Lindner wanted to save something, he would have to approach Unicredit boss Orcel now. He could, for example, use the remaining twelve percent of the federal government and actively use it as leverage: You get Commerzbank and the blessing of the federal government, but we will ask for a price in return – for example, the head office or at least an important second office of the new bank in Frankfurt. Lindner would also have a strong argument: With the German AAA rating, a bank is automatically considered safer than with the Italian BBB rating. With a solvent state behind it, it can refinance more cheaply and is more competitive. So it’s a win-win for Unicredit and Germany.
This would at least give the government a little bit of a lead. Or it could actively work on an alternative, perhaps with Deutsche Bank.
If she fails to do so, however, there will only be one conclusion: this country does not deserve a finance minister for whom privatization is just party folklore and who squanders one of his office’s core tasks.
Source: Stern
