By Valentina Za, Rachel More and Tom Sims

MILAN/BERLIN () -Germany rejected UniCredit’s latest Commerzbank (ETR:) stake increase as an “uncoordinated and unfriendly approach” on Wednesday, strongly rebuking the Italian bank.

UniCredit, which angered Berlin when it emerged as Commerzbank’s biggest private investor in September, said it had raised its stake in Commerzbank to 28% using derivatives.

“Today’s news is remarkable because UniCredit had previously publicly emphasised that it did not want to take any further action before the federal elections,” a German government spokesperson said in response to the development.

UniCredit CEO Andrea Orcel had said he wanted to wait until a new government was in place in Berlin before making an offer, explaining that German takeover rules would force UniCredit to pay cash – and above a certain price – if it launched a full bid for Commerzbank within six months of acquiring at least 5%.

“We reject UniCredit’s uncoordinated and unfriendly approach,” the spokesperson said, adding that the government in Berlin was “working hard to find a good solution for Germany”, without giving details.

reported in October that Germany, which is holding federal elections in February, was working to frustrate a possible takeover. But the government has limited options, with sources saying available legal routes are largely dead ends.

UniCredit was not immediately available to comment.

The Italian bank’s moves have pitted Orcel against much of the German establishment opposed to both a takeover of the country’s second-largest listed lender and the way in which UniCredit has built its stake.

The Italian bank has largely achieved this by discreetly buying derivatives that can convert into shares.

It is now waiting on European Central Bank clearance to own up to 29.9% of Commerzbank, just below the level that would trigger a mandatory takeover offer, and will need that approval to convert its derivatives.

UniCredit holds 9.5% of Commerzbank directly and 18.5% through derivatives. It had previously raised its stake in Commerzbank, also with the use of derivatives, to near 21%.

The latest move ups the pressure on Commerzbank management, even as another deal Orcel is pursuing, to buy Italian rival Banco BPM, has run into domestic difficulties.

“By securing a larger stake, UniCredit is positioning itself to exert greater influence over Commerzbank’s management, while limiting the German lender’s strategic options,” said Marco Troiano, Head of Financial Institutions, Scope Ratings.

UniCredit has said that while a combination with Commerzbank would be the best outcome, it can also remain purely an investor, or even sell its stake and pocket gains.

“This move reinforces UniCredit’s view that substantial value exists within Commerzbank that needs to be crystallised,” UniCredit said.

A Commerzbank spokesperson said it continued to focus on its own strategy, which it will present to investors on Feb. 13.

Shares in Germany’s second-largest bank were up 2.4% at 1445 GMT.

Meanwhile, UniCredit said that the ECB authorisation process, which can take up to 90 working days from when the central bank receives the documents, is ongoing and it was in touch with supervisors.

The ECB declined to comment.

Given the complexity of the evaluation, the ECB’s assessment is expected to take close to the entire period it has available. UniCredit had applied in September for Commerzbank clearance and last week said it was also applying for its BPM bid.

UniCredit is not new to Germany. It has owned Bavarian bank HVB since 2005. Since taking over as CEO in 2021, Orcel has tightened its grip on HVB and cut costs, providing a template to improve Commerzbank’s returns, UniCredit has said.