UniCredit SpA chief executive officer Andrea Orcel used Barclays plc to help quietly build up a stake in Commerzbank AG, a move that has shaken European finance and triggered a backlash from the German government.

The UK-based lender arranged derivatives linked to Commerzbank for the Italian lender in the weeks before Berlin sold a stake earlier this month, people familiar with the matter said. Orcel subsequently also relied on firms including Barclays to effectively expand its holding in Commerzbank to the current level of about 21%, they said asking not to be named discussing the private information.

Representatives for Barclays and UniCredit declined to comment.

Orcel stunned Germany about two weeks ago when he used a government placement to acquire a 4.5% stake in Commerzbank after he had built up an equal holding through open-market transactions that included derivatives. He subsequently relied on financial instruments to boost economic ownership to 21%, the lender announced on Monday.

Berlin on Friday said it’s suspending Commerzbank share sales until further notice, a decision at least partly stemming from its unhappiness over the nature of Orcel’s approach, Bloomberg has reported. Orcel has said that the government was aware UniCredit owned 4.5% in Commerzbank before he bought more shares in the government placement, but those comments have added to tensions with Germany, people familiar with the matter have said.

“Physical settlement” of the derivatives, which would turn UniCredit into the formal owner of the Commerzbank shares and thus the German lender’s biggest investor, “may only occur after the required approvals have been obtained,” UniCredit said in the statement on Monday. The Italian lender is applying with the European Central Bank to increase its stake to as much as 29.9%. 

Financial instruments gave UniCredit control over 1.92% in Commerzbank voting rights, out of the Italian lender’s total stake of 9.21%, according to a regulatory filing issued after the government sale almost two weeks ago. A large chunk of that came through derivatives known as total return swaps, which transfer economic ownership to the beneficiary but not legal ownership.

  - Bloomberg