Finance
German authorities caught cold by UniCredit’s swoop on Commerzbank
A protestor holds a placard with a slogan reading “Stop Merger Horror” during a union demonstration outside the Commerzbank AG headquarters in Frankfurt, Germany, on Tuesday, Sept. 24, 2024.
Bloomberg | Bloomberg | Getty Images
Italy’s UniCredit appears to have caught German authorities off guard with a potential multibillion-euro merger of Frankfurt-based Commerzbank, a move that has triggered a fiery response from Berlin.
Market observers told CNBC that the swoop may have provoked a sense of national embarrassment among Germany’s government, which firmly opposes the move, while it’s been argued that the outcome of the takeover attempt could even put the meaning of the European project at stake.
Milan-based UniCredit announced on Monday that it had increased its stake in Commerzbank to around 21% and submitted a request to boost that holding to up to 29.9%. It follows UniCredit’s move to take a 9% stake in Commerzbank earlier this month.
“If UniCredit can take Commerzbank and take it to their level of efficiency, there’s a tremendous upside in terms of increased profitability,” Octavio Marenzi, CEO of consulting firm Opimas, told CNBC’s “Squawk Box Europe” on Tuesday.
“But [German Chancellor] Olaf Scholz is not an investor. He’s a politician and he’s very concerned about the jobs side of things. And if you look at what UniCredit has done in terms of slimming down things in its Italian operations or particularly in its German operations, it’s been quite impressive,” Marenzi said.
Scholz on Monday criticized UniCredit’s decision to up the ante on Commerzbank, describing the move as an “unfriendly” and “hostile” attack, Reuters reported.
Commerzbank’s Deputy Chair Uwe Tschaege, meanwhile, reportedly voiced opposition to a potential takeover by UniCredit on Tuesday. Speaking outside of the lender’s headquarters in central Frankfurt, Tschaege said the message was simple and clear: “We don’t want this.”
“I feel like vomiting when I hear his promises of cost savings,” Tschaege reportedly added, referring to UniCredit ‘s CEO Andrea Orcel.
Separately, Stefan Wittman, a Commerzbank supervisory board member, told CNBC on Tuesday that as many as two-thirds of the jobs at the bank could disappear if UniCredit successfully carries out a hostile takeover.
The bank has yet to respond to a request for comment on Wittmann’s statement.
Hostile takeover bids are not common in the European banking sector, although Spanish bank BBVA shocked markets in May when it launched an all-share takeover offer for domestic rival Banco Sabadell. The latter Spanish lender rejected the bid.
Opimas’ Marenzi said the German government and trade unions “are basically looking at this and saying this means we could lose a bunch of jobs in the process — and it could be quite substantial job losses.”
“The other thing is there might be a bit of a national embarrassment that the Italians are coming in and showing them how to run their banks,” he added.
A spokesperson for Germany’s government was not immediately available when contacted by CNBC on Tuesday.
Germany’s Scholz has previously pushed for the completion of a European banking union. Designed in the wake of the 2008 global financial crisis, the European Union’s executive arm announced plans to create a banking union to improve the regulation and supervision of lenders across the region.
What’s at stake?
Craig Coben, former global head of equity capital markets at Bank of America, said the German government would need to find “very good” reasons to block UniCredit’s move on Commerzbank, warning that it would also have to be consistent with the principles around European integration.
“I think it is very difficult for UniCredit to take over or to reach an agreement on Commerzbank without the approval of the German government, just as a practical matter — but I think Germany needs to find a legitimate excuse if it wants to intervene [or] if it wants to block the approach from UniCredit,” Coben told CNBC’s “Squawk Box Europe” on Tuesday.
The Commerzbank AG headquarters, in the financial district of Frankfurt, Germany, on Thursday, Sept. 12, 2024.
Emanuele Cremaschi | Getty Images News | Getty Images
“Germany has signed up to the [EU’s] single market, it has signed up to the single currency, it has signed up to [the] banking union and so it would be inconsistent with those principles to block the merger on the grounds of national interest,” he continued.
“And I think that’s really what’s at stake here: what is the meaning of [the] banking union? And what is the meaning of the European project?”
Former European Central Bank chief Mario Draghi said in a report published earlier this month that the European Union needs hundreds of billions of euros in additional investment to meet its key competitiveness targets.
Draghi, who has previously served as Italian prime minister, also cited the “incomplete” banking union in the report as one factor that continues to hinder competitiveness for the region’s banks.
— CNBC’s April Roach contributed to this report.
Alliance Global Partners chief global strategist Mark Grant discusses his income tax strategy for retirees on ‘Varney & Co.’
For the generation that should be in its “peak savings years,” the prospect of retiring on time has shifted from a plan to a prayer.
A newly released Employee Financial Wellness Survey by PwC found that nearly 50% of Gen X employees are pushing back their retirement dates, citing stagnant wages, rising everyday costs, and a lack of liquid savings.
Additionally, only 38% of Gen Xers believe they can retire when they originally planned, and more than half of this demographic expect to withdraw funds from their retirement accounts early to cover short-term costs.
“For employers, this isn’t a future problem. Financial anxiety during peak career years can affect focus and engagement,” PwC researchers write. “If the risks are clear, the question is why more employees aren’t taking action. It’s not a lack of desire. Most employees want stability, confidence and to feel in control. But many don’t feel equipped to get there.”
TEEN INVESTOR BOOM: WHY WALL STREET IS CHASING YOUNGEST GENERATIONS EARLIER THAN EVER
The primary driver of this retirement delay is the inability to save as inflation eats away at monthly expenses, the report notes. Twenty-five percent of the total workforce is living without a buffer, and nearly half cannot meet basic household expenses.
Nearly half of Gen X workers are delaying retirement, PwC reports. (Getty Images)
“[Forty-nine percent] say their compensation isn’t keeping up with costs. As expenses rise faster than income, day-to-day trade-offs are becoming routine. Employees aren’t just feeling squeezed. They’re making difficult financial decisions to stay afloat,” the PwC report continues..
As a result, when Gen Xers cannot afford to leave their current jobs, the entire corporate ladder stalls, creating business risks, with companies facing higher costs as older talent remains on payroll longer than expected.
BlackRock Global Head of Retirement Solutions Nick Nefouse joins ‘Varney & Co.’ to discuss a proposed rule expanding 401(k)s to crypto and real estate.
“When employees dip into retirement funds early or delay retirement altogether, it affects more than personal finances and retirement plan leakage,” the report says. “It may also influence workforce planning, healthcare costs, succession timing and overall organizational stability.”
The findings also show that a significant portion – 41% – of the workforce feel they were never given the tools to manage a crisis of this magnitude, leading to a sense of being “overwhelmed” by financial choices.
GET FOX BUSINESS ON THE GO BY CLICKING HERE
‘The Big Money Show’ breaks down new IRS limits for 401(k)s and IRAs, giving savers more room to invest for retirement.
PwC provided a call to action for employees and their employers, encouraging them to reduce the stigma around financial education, foster trust through human coaches, emphasize skill building and focus on day-to-day finances before long-term goals.
“Employees define financial wellness simply: less stress, fewer surprises and the freedom to make financial choices with confidence. For employers, that’s the opportunity.”
Cybersecurity and enterprise software stocks have been market dogs in 2026, with fears that AI will wipe out a wide range of companies in the enterprise space dominating the narrative. But they snapped a brutal losing streak this past week, joining in the broader market rally that saw all losses from the U.S.-Iran war regained by the Dow Jones Industrial Average and S&P 500.
Cybersecurity has been “a victim of some of the AI-related headlines,” Christian Magoon, Amplify ETFs CEO, said on this week’s “ETF Edge.”
It wasn’t just niche cybersecurity names. Take Microsoft, for example, which was recently down close to 20% for the year. Its shares surged last week by 13%.
A big driver of the pummeling in software stocks was a rotation within tech by investors to AI infrastructure and semiconductors and some other names in large-cap tech, Magoon said, and since cybersecurity stocks and ETFs are heavily weighted towards software companies, they were left behind even as those businesses continue to grow on a fundamental basis.
But Wall Street now has become more bullish with the stocks at lower levels. Brent Thill, Jefferies tech analyst, said last week that the worst may be over for software stocks. “I think that this concept that software is dead, and then Anthropic and OpenAI are going to kill the entire industry, is just over-exaggerated,” he said on CNBC’s “Money Movers” on Wednesday.
“Big Short” investor Michael Burry wrote in a Substack post on Wednesday that he is becoming bullish about software stocks after the recent selloff. “Software stocks remain interesting because of accelerated extreme declines last week arising from a reflexive positive feedback loop between falling software stocks and changes in the market for their bank debt,” he wrote.
The Global X Cybersecurity ETF (BUG), is down about 12% since the beginning of the year, with top holdings including Palo Alto Networks, Fortinet, Akamai Technologies and CrowdStrike. But BUG was up 12% last week. The First Trust NASDAQ Cybersecurity ETF (CIBR) is down 6% for the year, but up 9% in the past week.
Piper Sandler analyst Rob Owens reiterated an “overweight” rating on Palo Alto Networks which helped the stock pop 7% — it is now down roughly 6% on the year. Its peers saw similar moves, including CrowdStrike.
Performance of Global X cybersecurity ETF versus S&P 500 over past one-year period.
Magoon said expectations may have become too high in cybersecurity, and with a crowding effect among investors, solid results were not enough to to push stocks higher. But the down-and-then-back-up 2026 for the sector is also a reminder that when stocks fall sharply in a short period of time, opportunity may knock.
“Once you’re down over 10% in some of these subsectors, you start to see the contrarians start to say, ‘well, maybe I’ll take a look at this,'” Magoon said.
He said AI does add both opportunity and uncertainty to the cybersecurity equation, increasing demand but also introducing new competition. But he added, “I think the dip is good to buy in an AI-driven world,” specifically because the risks to companies may lead to more M&A in cyber names that benefits the stocks.
For now, investors may look for opportunity on the margins rather than rush back into beaten-up tech names. “I think investors are still going to remain underweight software,” Thill said.
But Magoon advises investors to at least take the reminder to keep an eye on niches in the market during pronounced downturns. “The best-performing are often the least bought and do the best over the next 12 months versus late-in-the-game piling on,” he said.
While that may have been a mindset that worked against the last investors into cybersecurity and enterprise software in mid-2025 when the negative sentiment started building, at least for now, it’s started working for the stocks in the sector again.
Meanwhile, this year’s biggest winner is also a good example of what can be an extended trade in either a bullish or bearish direction. Last year, institutional ownership of energy was at multi-year lows, Magoon said, referencing Bank of America data. “Reverse sentiment can be a great indicator,” he said.
But he cautioned that any selective buying of stocks that have dipped does have to contend with the risk that there is a potentially bigger drawdown in the market yet to come in 2026. That is because midterm election years historically have been marked by large drawdowns. “If you think it is bad right now, it could get a lot worse,” Magoon said. But he added that there’s a silver-lining in that data, too, for the patient investor. The market has posted very strong 12-month returns after midterm election drawdowns end. So, for investors with a longer-term time horizon and no need for short-term liquidity, Magoon said, “stick in there.”
Sign up for our weekly newsletter that goes beyond the livestream, offering a closer look at the trends and figures shaping the ETF market.
New innovation in the exchange-traded fund industry could come at a cost to investors during extreme conditions.
According to MFS Investment Management’s Jamie Harrison, ETFs involved in increasingly complex derivatives and less transparent markets may be in uncharted territory when it comes to violent downturns.
“Those would be something that you’d want to keep an eye on as volatility ramps up,” the firm’s head of ETF capital markets told CNBC’s “ETF Edge” this week. “As innovation continues to increase at a rapid pace within the ETF wrapper, [it’s] definitely something that we advise our clients to be really front-footed about… Lack of transparency could absolutely be an issue if we’re going to start seeing some deep sell-offs.”
His firm has been around since 1924 and is known for inventing the open-end mutual fund. Last year, ETF.com named MFS Investment Management as the best new ETF issuer.
“It’s important to do due diligence on the portfolio,” he said. “Having a firm that has deep partnerships, deep bench of subject matter experts that plays with the A-team in terms of the Street and liquidity providers available [are] super important.”
Liquidity as the real issue?
Harrison suggested the real issue is liquidity, particularly during a steep sell-off.
“We’ve all seen the news and the headlines around potential private credit ETFs. That picture becomes much more murky,” he added. “It’s up to advisors, to investors [and] to clients to really dig in and look under the hood and engage with their issuers.”
He noted investors will have to ask some tough questions.
“What does this look like in a 20% drawdown? How does this liquidity facility work? Am I going to be able to get in? Am I going to be able to get out? And if I’m able to get out, am I able to get out at a price that’s tight to NAV [net asset value], and what’s the infrastructure at your shop in terms of managing that consideration for me,” said Harrison.
Amplify ETFs’ Christian Magoon is also concerned about these newer ETF strategies could weather a monster drawdown. He listed private credit as a red flag.
“If your ETF owns private credit, I think it’s worth taking a look at, kind of what the standards are around liquidity and how that ETF is trading, because that should be a bit of a mismatch between the trading pace of ETFs and the underlying asset,” the firm’s CEO said in the same interview.
Magoon also highlighted potential issues surrounding equity-linked notes. The notes provide fixed income security while offering potentially higher returns linked to stocks or equity indexes.
“Those could potentially be in stress due to redemptions and the underlying credit risk. That’s another kind of unique derivative,” Magoon said. “I would very closely look at any ETF that has equity-linked notes should we get into a major drawdown or there be a contagion in private credit or something related to the banking system.”
Gen X can’t retire on time as inflation outpaces wages, survey finds
Are you ready for it? 4 steps to successfully integrate AI into your operations
What that means for consumer loans
Armanino adds Strategic Accounting Outsourced Solutions
New 2023 K-1 instructions stir the CAMT pot for partnerships and corporations
