UPDATE 1-Commerzbank to issue shares at 45 pct discount

Sun May 22, 2011 2:15pm EDT

Related Topics

* To issue 2.44 billion shares at 2.18 euros each

* Shareholders offered 10 new shares for each 11 held

* Priced at 45 pct discount to Friday's close

* Proceeds to help repay state aid (Adds details and background)

FRANKFURT, May 22 (Reuters) - Commerzbank AG (CBKG.DE) will issue 2.44 billion new shares at 2.18 euros each, raising around 5.3 billion euros ($7.5 billion) to help repay state aid it got in the financial crisis, Germany's second-biggest lender said.

The issue price comes at a 45 percent discount to Friday's closing price of 3.95 euros, and 30 percent below the theoretical ex-rights price (TERP), in line with what sources close to the process told Reuters last week. [ID:nLDE74H1T5]

Commerzbank joins other banks such as Italy's Intesa Sanpaolo SpA (ISP.MI) as Europe's banks shore up their balance sheets to satisfy regulators. [ID:nLDE7350OH]

The rights issue is part of a series of measures by which Commerzbank plans to return by June 14.3 billion euros of the 16.2 billion the state injected into the bank during the crisis.

This will help free the bank from government controls such as a cap on bonuses. [ID:nLDE73503O]

Commerzbank's discount was slightly higher than that granted by Deutsche Bank AG (DBKGn.DE) and Porsche SE (PSHG_p.DE) in their recent cap increases. [ID:nLDE68J21L] [ID:nLDE72Q0IH]

Since the beginning of May, Commerzbank shares have lost around 12 percent in value.

Banks had guaranteed the full volume of the proceeds and negotiated the discount on the new shares prior to the announcement of the capital measures in April.

Germany took a 25 percent stake in Commerzbank and full ownership of Hypo Real Estate [NUEG.UL] during the crisis.

It also invested in so-called silent participations, a form of non-voting capital, in Commerzbank, Aareal Bank and WestLB [WDLG.UL].

The 5.3 billion Commerzbank intends to raise includes the state Financial Market Stabilisation Fund's partial contribution of its silent participations, the bank said on Sunday.

Taking into account the bank's separate sale of mandatory exchangeable notes, the issue roughly quadruples the number of shares outstanding. [ID:nWEA4434]

In the first stage of its capital measures, Commerzbank sold notes worth 5.7 billion euros, which automatically converted into ordinary shares after gaining approval at the bank's annual general meeting on May 6. [ID:nLDE74502N] [ID:nLDE73C1ZZ]

The subscription period for the new shares runs from May 24 to June 6. Subscription rights will trade between May 24 and June 1. The new shares are set to start trading on June 7. ($1=.7064 Euro) (Reporting by Alexander Hueber and Michael Shields; Editing by Tim Dobbyn)

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