UniCredit increases stake in Commerzbank to 28% through derivatives

that of Italy UniCredit said Wednesday that it has increased its potential stake Commerzbank up to 28% using other derivatives as markets look to see if it will take the plunge with a purchase of the German lender.

This is an increase from the previous 21%.

Italy’s second-biggest bank said its ownership now consists of a direct stake of 9.5% and around 18.5% through derivatives.

UniCredit has asked the European Central Bank for permission to acquire a stake of up to 29.9% in the German bank, as CEO Andrea Orcel simultaneously pursues a bid for Italian peer Banco BPM.

“This move reinforces UniCredit’s view that substantial value exists in Commerzbank that needs to be crystallized,” UniCredit said in a press release on Wednesday. “It reflects belief in Germany, its businesses and its communities, and the importance of a strong banking sector in driving Germany’s economic development.”

The lender stressed that its position remains “purely an investment” at this point and does not affect its 10 billion euro ($10.49 billion) bid for Banco BPM. Analysts believe that Orcel could still sweeten its offer and introduce a cash component to pursue internal consolidation. In a statement accompanying its offer of Banco BPM in November, UniCredit noted that this merger would serve to “consolidate its competitive position and expand its presence in Italy”, where it is the second Intesa Sanpaolo.

UniCredit has yet to warm to its German takeover target or the Berlin administration to a potential deal. Commerzbank said on Wednesday it had “taken note of the announcement” but declined to comment beyond pointing to its strategy, which is currently being updated and will be unveiled on February 13.

The German government has so far opposed Orcel’s courtship of Commerzbank, but faces its own turmoil following the collapse of the ruling coalition and Chancellor Olaf Scholz. loss of vote of no confidence earlier this week paved the way for February’s election. The German administration retains a 12% stake in Commerzbank, after offloading a 4.5% stake in September in an effort to exit its position in the lender it bailed out during the 2008 financial crisis.

A merger with Commerzbank in Germany, where UniCredit operates through its HypoVereinsbank division, could create synergies in capital markets, advisers, payments and trade finance activity, analysts have previously noted.

UniCredit shares were up 1.1% at 9:44 a.m. London time, and Commerzbank shares were up 3.1%.

— CNBC’s Greg Kennedy contributed to this report.