UniCredit CEO Andrea Orcel has acquired a significant stake in Commerzbank, just under 48%, through a low-ball stock offer. This move, which gives UniCredit control over Commerzbank's supervisory board, has left market observers puzzled over how Orcel secured shares at below-market rates.

One prevailing theory involves "total return swaps" UniCredit may have arranged with other banks. These swaps could incentivize counterparties to buy Commerzbank shares to hedge their positions. The complexity deepens if UniCredit structured these swaps based on "tendered" shares, a legal distinction in Germany that might allow banks to pledge regular stock to back the swaps. The rise in Commerzbank stock on loan, from 1% to nearly 10%, supports this hypothesis.

However, this strategy presents risks for the involved banks, as tendered shares typically trade at a discount, and borrowed shares must be repaid. UniCredit might have agreed to cover potential shortfalls, complicating the perceived low cost of the acquisition. Alternatively, sellers may have accepted the offer fearing a sharp decline in Commerzbank's share price if UniCredit's bid failed.

Regardless of the mechanics, Orcel's acquisition of sufficient shares to influence Commerzbank's future direction marks a strategic victory for UniCredit. The implications for Commerzbank's management and shareholders, while potentially unsettling, could ultimately lead to financial gains if UniCredit's expertise drives value.