Commerzbank is Europe's most shorted bank stock as UniCredit offer nears close

Commerzbank AG has become Europe's most shorted bank stock, S&P Global Market Intelligence shows, as UniCredit SpA's public tender offer for its German peer nears its close.

Some 10.66% of Commerzbank's outstanding shares were on loan as of June 10, jumping from 1.53% at the end of March, the data shows. A spike of a similar scale was last seen on July 9, 2025, as short positions rose to 13.50% from 2.39% — the day after UniCredit disclosed that it had converted some synthetic positions in Commerzbank that drove its physical share ownership to about 20%.

Commerzbank overtook Svenska Handelsbanken AB (publ) and UK-based Close Brothers Group PLC as the most shorted European bank stock. Short sellers typically borrow and then sell shares in the hope that the price falls, before repurchasing them at a lower price and profiting from the difference.

Heightened activity

On June 10, Commerzbank said securities lending activity involving its shares had increased by more than 10x since UniCredit announced its bid.

"It cannot therefore be excluded that the significant increase in securities lending activity is connected to the tendering behavior of certain banks and parties connected to UniCredit," Commerzbank said in a press release, adding that no institutional investors had tendered their shares and none of those that tendered held material stakes prior to the offer.

"In the interest of market transparency, Commerzbank expects UniCredit as well as the banks and parties connected to it to disclose the material terms of the agreements underlying their hedging and derivative transactions," the bank said.

Commerzbank said its June 9 closing price was 6% above the implied offer price. "Tendering under these circumstances lacks economic rationale and raises the question of whether undisclosed economic compensation arrangements exist," the bank said.

UniCredit response

UniCredit, in a June 15 press release, rejected claims that the actual number of tendered shares is lower than disclosed as "false and without foundation." Its holdings and interests in Commerzbank have been disclosed clearly and accurately, and it has referred these matters to the German regulator for review, UniCredit said.

The Italian bank has said in multiple offer update statements that it was a party to derivative financial instruments not subject to disclosure obligations under German securities trading law. Such instruments are part of the group's management of its overall position in Commerzbank and are designed to provide "downside protection," the bank said in a statement.

The instruments comprise long put options, short call options, collar transactions combining put and call options and short cash-settled total return swaps of varying tenors.

UniCredit had secured acceptances representing roughly 11.86% of Commerzbank's share capital as of June 12, giving it a direct holding of 38.63%, the bank said. It has derivatives linked to a further 16.41% of the share capital.

A Commerzbank spokesperson declined to comment but pointed to the bank's June 10 press release. UniCredit did not immediately respond to a request for comment from Market Intelligence.

The acceptance period for the offer runs until June 16 and can be extended until July 3.

Increased short-selling activity is very common around M&A transactions if there are differences in the prices of the two companies and there is a good level of certainty that the deal will go through, according to Matt Chessum, director for securities finance, ETF and benchmarking services at S&P Global Market Intelligence.

The cost of the collateral posted against the borrowed shares and the fee paid to borrow them would have to be lower than the potential price difference of the arbitrage to make it profitable, he said.

Heated battle

UniCredit has been building a stake in Commerzbank for nearly two years, and announced on March 16 that it was making a takeover bid. CEO Andrea Orcel has said the Italian lender does not intend to secure a controlling stake through the tender offer. Rather, passing the 30% ownership threshold would enable the bank to buy more shares in the open market without having to launch a fresh takeover bid.

Commerzbank has repeatedly criticized the offer as undervaluing its current market standing and its future potential performance. CEO Bettina Orlopp said during a June 4 conference that her bank "does not need to be restructured."

However, Orlopp said a "friendly deal" could be possible if there is a premium for shareholders and value-creation potential. Recognition of Commerzbank's future growth potential and its German roots would be prerequisites to any deal, Orlopp said.

In the face of UniCredit's advances, Commerzbank has beefed up its financial targets and extended the timeline of its strategy to 2030. The strategy entails around 3,000 job cuts.

The prospect of Commerzbank, a key lender to small businesses in Germany, being under the control of a foreign bank has been opposed by both the German government and Commerzbank's workers. The government still owns about 12% of Commerzbank.

Commerzbank's shares rose 26.2% between March 15, 2026, the day before UniCredit announced its intention to launch a takeover offer, and June 10. The stock outpaced the 14.1% growth of UniCredit and the 13.5% growth of the S&P Europe BMI Banks index.