(Bloomberg) -- UniCredit SpA worked with Citigroup Inc. to hedge part of last month’s stake increase in Commerzbank AG, people with knowledge of the matter said.
Citigroup holds 5.1% voting rights in Commerzbank through financial instruments after trades that took place on Dec. 20, according to a regulatory disclosure this week. The US bank’s derivative interest relates to some of the additional stake that UniCredit revealed last month, the people said, asking not to be identified because the information is private.
UniCredit said last month it had increased its holding in the German lender to about 28%, up from a previous level of 21%. The bank added that the exposure is almost fully hedged, “displaying prudency in approach and providing full flexibility and optionality.”
Structuring derivatives for investors to gain exposure to a stock can be lucrative work for investment banks. UniCredit previously used Barclays Plc and Bank of America Corp. to help quietly build up its Commerzbank stake in several stages, Bloomberg News has reported. It’s also worked with Jefferies Financial Group Inc. to take out additional protection on its Commerzbank holdings and secure optionality for any future moves, people with knowledge of the matter said in October.
Representatives for UniCredit and Citigroup declined to comment.
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