Berlin currently owns about 16.5% in Commerzbank, worth roughly 2.5 billion euros
The German government plans to sell as much as 5 per cent in Commerzbank in a first step as it seizes on a recent share rally to initiate an exit from the lender it rescued over a decade ago.
The state is initially targeting the sale of 3 per cent to 5 per cent in the Frankfurt-based firm, according to people familiar with the matter, who asked not to be identified because the process is private. That disposal could happen as early as this month, with more sales possible at a later date, according to one of the people.
Berlin currently owns about 16.5 per cent in Commerzbank, worth roughly 2.5 billion euros (S$3.61 billion). The country’s Finance Agency, which manages the holding, announced on Tuesday (Sep 3) that it plans to reduce the investment, without disclosing by how much.
A spokesperson for the Finance Agency declined to comment.
Commerzbank fell 2.3 per cent at 10.13 am in Frankfurt trading, paring gains over the past year to 25 per cent. Like other European lenders, the firm has reaped the benefits from the European Central Bank’s series of interest rate hikes. That tailwind is set to fade as the ECB is widely expected to cut rates for a second time this year when it meets next week. Germany’s struggling economy is adding to headwinds for banks.
“Commerzbank is a stable and profitable institution again,” German Deputy Finance Minister Florian Toncar said in the release late on Tuesday. “Consequently, the federal government will sell its shares in the successfully stabilised institute step by step.”
Germany joins other European countries including Italy, the Netherlands and Greece in selling down stakes in banks they acquired during the financial crisis. The government has been mulling a sale of its Commerzbank stake for some time, with Bloomberg reporting two years ago it was waiting for the stock to continue rising. It was trading at about 8 euros per share at the time, compared with roughly 13 euros at present.
Commerzbank is an important source of credit for Germany’s economy, and it has a focus on providing funding for its exporting companies. The government is currently the largest shareholder in the lender. The next biggest investor is BlackRock with about 7 per cent. Bloomberg
