CashNews.co
(Bloomberg) — Germany plans to sell a significant part of its stake in Commerzbank AG as it seeks to draw a line under the lender’s bailout more than a decade ago.
Most Read from Bloomberg
Berlin, which owns 16.5% of Commerzbank, will initially target a disposal of 3% to 5% in the Frankfurt-based firm, according to people familiar with the matter, who asked not to be identified because the process is private. That could happen as early as this month, with more sales possible at a later date, the people said.
A spokesperson for the country’s Finance Agency, which manages the holding, declined to comment. The agency announced on Tuesday that it plans to reduce the investment, without disclosing by how much.
The German government joins other European administrations including Italy, the Netherlands, the UK and Greece in selling down bank stakes they acquired through various bailouts during the financial crisis. The transactions have involved ABN Amro Bank NV, NatWest Group Plc and Banca Monte dei Paschi di Siena S.p.A., though a large part of the deals already happened last year.
Germany 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. After a rally fueled by rising interest rates and surging income from lending, the stake is now worth about €2.5 billion ($2.8 billion).
That still has Berlin — like so many other governments that bailed out lenders in the crisis — looking at a potential loss. Commerzbank received financial aid worth €18.2 billion during the bailout in 2008 and 2009 and has repaid about €13.2 billion, the Finance Agency said. That suggests a shortfall of about €2.5 billion at current prices.
Commerzbank fell as much as 4.4% in Frankfurt trading on Wednesday and was trading 1.5% lower at 2:07 p.m., paring gains over the past 12 months to 26%.
The plan to sell a stake in Commerzbank is the “beginning” of Germany’s exit from the lender, Finance Agency head Eva Grunwald said in the release.
Commerzbank is an important source of credit for Germany’s economy as it has a focus on providing funding for its exporting companies. The government is currently its largest shareholder. The next biggest investor is BlackRock Inc. with about 7%, according to data compiled by Bloomberg.
Chief Executive Officer Manfred Knof has approached state-backed funds from Asia and the Middle East to gauge their interest in buying a stake, Bloomberg reported last year. Commerzbank had been discussing internally the prospect and implications of the German government selling down its stake, people familiar with the matter said at the time.
“We have the impression that there’s indeed a clear interest in our stock, our company” among investors, Chief Financial Officer Bettina Orlopp said at an event Wednesday.
While the firm reaped the benefits from the European Central Bank’s series of interest rate hikes over the past years, that tailwind is set to fade, with the ECB is expected to cut rates for a second time this year when it meets next week. Germany’s struggling economy is adding to headwinds.
“Commerzbank is a stable and profitable institution again,” German Deputy Finance Minister Florian Toncar said in the release on Tuesday. “The federal government will sell its shares in the successfully stabilized institute step by step.”
–With assistance from Kamil Kowalcze.
(Updates with Commerzbank CFO in 11th paragraph.)
Most Read from Bloomberg Businessweek
©2024 Bloomberg L.P.