German competition body urges govt to sell Commerzbank stake
BERLIN, July 9
BERLIN, July 9 (Reuters) - Germany's monopolies commission on Wednesday urged the German government to sell its 17 percent stake in Commerzbank, which the state purchased as part of an emergency bail out during the financial crisis.
Commerzbank was one of the highest-profile casualties of the global financial crisis with the German government spending around 18 billion euros ($25 billion) to bail it out.
"The monopoly commission actually urges that the state withdraw from Commerzbank," said Daniel Zimmer, head of the commission which advises the government on competition issues, while presenting a report.
The government's stake represents an additional nuisance in a financial market already marked by numerous competitive distortions, the commission said. It made no sense for the government to sit on the stake in hopes of a better share price.
The government has said it wishes to avoid selling the stake at a loss to taxpayers but that it had no plans to remain a long-term shareholder.
Since the bail-out, Commerzbank has cut costs and sold assets, and returned to profit in 2013. But like rivals it is struggling with low interest rates and weak fixed-income markets, and also faces growing competition for its core mid-sized company customers - the backbone of Europe's largest economy.
Analysts calculate that the break-even price for the government would be around 26 euros per share, far from the current price of 10.94 euros. The bank's shares have shed almost 7 percent so far this year, underperforming the European bank index, down 2 percent, but outperforming flagship Deutsche Bank, down 21 percent.
The monopoly commission in Germany is an independent body that can make recommendations but cannot force the government to take actions. (Reporting by Gernot Heller; writing by Thomas Atkins; Editing by Elaine Hardcastle)