With stricter reporting requirements, the federal government wants to prevent an approach similar to that which occurred when Italy’s Unicredit joined Commerzbank. A spokeswoman for the FDP-led Finance Ministry said on Monday when asked that new requirements for the purchase of financial instruments such as derivatives were being examined. Extended reporting requirements are possible if an investor builds up a stake in a company through shares and derivatives. So far, derivative positions, such as call options, only have to be reported at five percent. In the future, the threshold could be lowered to three percent, as it already applies to shares. The major Milan bank UniCredit acquired a Commerzbank share package of 4.5 percent from the federal government in September and then surprised by disclosing that it had shares and derivatives already have access to another 4.5 percent. In each case, it remained below the applicable reporting thresholds. In the meantime, the Italians say they have access to up to 21 percent of Commerzbank through shares and financial instruments. The planned takeover is met with skepticism in the government. The Ministry of Finance is now examining whether investors have to report the purchase of derivatives and a combination of stocks and derivatives at a threshold of three percent. It will also be examined whether it would be appropriate and compatible with EU law to shorten the notification period. Until now, such positions have to be reported across Europe within four stock market trading days.Turbulence caused by PorscheThe German reporting thresholds for the direct purchase or sale of shares are already stricter at three percent than the requirements of the EU Transparency Directive, which only sets them at five percent. The federal government extended the reporting requirements for derivatives to complex securities in 2012 after major shareholder Porsche “crept up” on Volkswagen using such securities (“cash-settled options”) and triggered severe turbulence in the car manufacturer’s shares. Institutional investors, such as public fund companies or ETF providers criticize the reporting requirements because they trigger a flood of costly mandatory notifications, even though there are no strategic decisions behind the positions. More on the topic DGB boss Yasmin Fahimi called on the federal government to also include regulatory hurdles in order to take over Commerzbank thwarted by UniCredit. “We expect that the political and regulatory options will be exhausted to prevent a takeover,” said the head of the German Federation of Trade Unions (DGB) to the “Handelsblatt”. “The future of thousands of employees and the stability of the German financial landscape are at stake.” However, tightening the reporting requirements would probably come too late for Commerzbank.
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