A few days before UniCredit CEO Andrea Orcel set his sights on his Italian prey, more evidence emerged of the strong resistance his interest in Commerzbank met in Germany.

According to insiders at a meeting at Commerzbank's Frankfurt headquarters, a group of prominent clients urged the German institution's CEO to oppose a deal with the Italian bank.

The warning aimed at Commerzbank's number one is that Germany's second-largest bank would meet the same fate as the Bavarian Hvb, which was bought by UniCredit in 2005 and then restructured and downsized.

On Monday Orcel shifted his spotlight to the domestic market with a 10.1 billion euro offer for Banco Bpm, claiming that this deal would take precedence over any potential move on Commerzbank.

Just over two months earlier Orcel took the German establishment by surprise by quietly building a substantial stake in the German bank that sparked opposition from politicians, industrialists and labor unions, who were concerned about the potential impact of strengthening the Italian bank on the so-called 'Mittelstand,' the band of small and medium-sized enterprises that is the backbone of the country's economy.

Some in Germany, including Finance Minister Joerg Kukies, see UniCredit's bid as virtually dead, and Orcel's change of course toward Italy was greeted with cautious relief at Commerzbank, according to sources familiar with the thinking within the bank.

According to one person familiar with his thinking, however, Orcel may not yet be ready to throw in the towel in Germany, preparing for a battle that could last several months.

A smaller deal in Italy could allow UniCredit to work on a bigger deal at the same time.

Resistance in Germany, however, remains strong.

One of the managers present at Commerzbank's recent meeting, Ulrich Grillo, who heads the eponymous chemical manufacturer--a Mittelstand company--said he expressed concerns to the board about a shift of major credit decisions to Milan.

Another participant, venture capitalist Christian Miele, scion of the famous household appliance family, said, "No one in that room was in favor."

After the acquisition of Hvb, UniCredit reduced the bank's workforce by two-thirds and closed hundreds of branches, accelerating staff cuts under Orcel management, who has led the institution since early 2021.

In a highly unusual move for a bank, Orcel also wanted to change Hvb's legal form, removing the 'AG' status that protects the board's independence in favor of a 'GmbH' legal form that allows shareholders to lead the board.

Interviews with dozens of national and local politicians, CEOs, union and government officials revealed fears that the script could repeat itself with Commerzbank.

What's more, UniCredit's blitz on Commerzbank came at a time of economic and political turmoil in Germany, with the economy at a standstill and a political vacuum in Berlin after the collapse of the governing coalition, fueling fears that Orcel could take advantage of the difficult environment.

Boris Rhein, the president of Hesse, the state where Commerzbank is headquartered, recently told a gathering of CEOs, including Commerz itself, that the country's second-largest bank must not be allowed to be swallowed up.

"We should blow on the sails of this flagship and not allow it to run aground," said Rhein, who belongs to the Christian Democrats who are likely to lead Germany's next governing coalition.

From UniCredit's perspective, the restructuring of Hvb has been a success: it has streamlined the bank by speeding up procedures on loan disbursement, while at the same time reducing costs.

A senior UniCredit executive denied that decisions on lending to German companies are made in Italy or at the group level, noting that decision-making at the local level has been enhanced over the past three years.

Since coming to the helm of UniCredit, Orcel has focused on the stock's stock price, which has increased nearly fivefold.

Demonstrating that a takeover of Commerzbank is on the back burner for now, Orcel told analysts on Monday that with the upcoming early elections in Germany "there would not be the basis or the ability to move in the short term. And there may not be the ability to move at all."

"By the time the second offer could be closed, we would have already integrated the first bank," Orcel had said.

(English version Andrea Mandalà, editing Sabina Suzzi)