Commerzbank shares jump after stake sale report

FRANKFURT Thu Aug 22, 2013 12:56pm EDT

FRANKFURT Aug 22 (Reuters) - Shares in Commerzbank jumped 6 percent on Thursday after a news report that the German government might be willing to sell its 17 percent stake in the country's second biggest bank to another European lender.

Manager Magazin, quoting a source from the finance ministry, said by selling to a preferred bidder, the government hoped to retain some control over the bank and safeguard its key role as a lender to small and mediaum sized companies.

"We wouldn't be able to prevent another investor, who has very different interests, from taking over Commerzbank after we exited," the source told the magazine, referring to a sale of shares on the open market.

The government acquired the stake after injecting 18.2 billion euros into Commerzbank during the global financial crisis.

Germany's finance ministry declined to comment on the details of the report except to say no stake sale was planned in the short term.

"This issue is not on the agenda. When and to whom the remaining share stake will be sold, is currently not foreseeable," a spokeswoman said on Thursday, reiterating a statement from last month.

Commerzbank declined to comment.

Media reports have identified France's BNP Paribas Spain's Santander and Switzerland's UBS as potential buyers.

ATTRACTIVE TARGET

On the face of it, Commerzbank is an attractive target. It has a market value of only 9.3 billion euros but had equity capital of 26.5 billion euros at the end of June.

But two of the main obstacles to a sale are Commerzbank's 149-billion-euro portfolio of non-core assets, which potential bidders do not want to acquire, and the bank's struggle to turn itself around in the wake of a disastrous merger with Dresdner Bank in 2008.

As a result, the German government is reviewing whether it should buy up some of Commerzbank's legacy assets, or whether to split up the lender, the magazine said.

The prospect of incurring losses makes the sale of the stake politically sensitive and no decision is expected before elections on Sept. 22.

Commerzbank's shares closed up 5.72 percent at 8.6 euros on Thursday, well below the 26 euros average price at which Germany bought its current stake.

Commerzbank has been restructuring ever since the acquisition of Dresdner and credit ratings agency Moody's recently said that it did not expect positive results from efforts to reduce costs and risks before 2015 or 2016.

Earnings have missed expectations in each quarter of 2012 and it further disappointed investors in this year's first quarter. ($1 = 0.7476 euros) (Reporting by Gernot Heller in Berlin and Edward Taylor in Frankfurt; Editing by David Cowell)

Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.