Commerzbank (2nd biggest German bank) gets $10bln EUR Gov. bailout

Discussion in 'Wall St. News' started by makloda, Jan 8, 2009.

  1. Europe not immune? Germany going to hell? Shocker!


    Commerzbank Gets Fresh Bailout as Germany Takes Stake (Update3)

    By Jann Bettinga and Oliver Suess

    Jan. 8 (Bloomberg) -- Commerzbank AG will get a second state bailout and hand a stake to the German government as it nears completion of the takeover of Dresdner Bank from Allianz SE.

    Germany’s second-largest bank will receive 10 billion euros ($13.7 billion) of capital from the government, which will take a stake of 25 percent plus one share in the combined lender, Frankfurt-based Commerzbank said in a statement today.

    Banks from UBS AG in Zurich to New York-based Citigroup Inc. were forced into state rescues after the September bankruptcy of Lehman Brothers Holdings Inc. froze credit markets. Chief Executive Officer Martin Blessing, who took the helm at Commerzbank in May, already tapped the state for 8.2 billion euros last November.

    “The sheer size of the additional capital required is much higher than expected,” said Konrad Becker, a Munich-based analyst at Merck Finck & Co. with a “hold” rating on Commerzbank and Allianz. “This can only be explained by Commerzbank seeking to start with a clean slate before acquiring Dresdner.”

    Commerzbank fell 84 cents, or 14 percent, to 5.25 euros in Frankfurt electronic trading. The stock has dropped 21 percent this year, valuing the bank at about 3.8 billion euros. Allianz fell 5.4 percent to 66.67 euros.

    Capital Ratio

    The capital injection will boost the combined Commerzbank- Dresdner Bank’s core capital ratio, a key measure of solvency, to about 10 percent, Commerzbank said. Germany’s bank-rescue fund, called Soffin, will buy 1.8 billion euros of Commerzbank shares and lend the rest of the money.

    In an agreement with Munich-based Allianz, the insurer will boost Dresdner’s capital by a further 1.45 billion euros by taking over some of the bank’s risky assets. For Allianz, the sale of Dresdner unwinds the 23.5 billion-euro purchase announced in 2001, which has dragged on the company’s profit and stock.

    Allianz will hold a 14 percent stake in Commerzbank after the merger with Dresdner is completed, compared with 18.4 percent under the previous plan, spokeswoman Petra Kruell said today. Allianz will also lend Dresdner 750 million euros.

    The German government pushed a 500 billion-euro bank rescue plan through parliament on Oct. 17, offering lenders capital infusions and debt guarantees. Commerzbank became Germany’s first publicly traded bank to get cash from the rescue fund.

    Not ‘Partial Nationalization’

    Bayerische Landesbank, IKB Deutsche Industriebank AG and HSH Nordbank AG have been granted aid in the form of debt guarantees. Hypo Real Estate Holding AG, the Munich-based property lender, received a 50 billion-euro government bailout in October.

    “Against the background of the intensified financial crisis, the new bank will thus be enabled to meet the substantially higher capital requirements for banks,” Commerzbank said in the statement.

    Deutsche Bank AG, the country’s largest bank, has said it doesn’t plan to accept government funds.

    The Berlin-based Finance Ministry, which will control the federal stake in Commerzbank, said today in an e-mailed statement that boosting the lender’s core capital ratio with taxpayers’ money sent a “strong signal that the Commerzbank is strong.”

    The ministry denied that the action equaled a “partial nationalization” of the lender. The government stake will improve Commerzbank’s competitiveness, the ministry stated.

    Commerzbank said in November it would accelerate its takeover of Dresdner by as much as a year to complete the 5.1 billion-euro deal this month. The takeover’s terms were revised after Commerzbank lost more than half of its market value since Aug. 31, when it agreed to buy Dresdner in a cash and share purchase then valued at 9.8 billion euros.
  2. Yes, we are strong! :D
  3. dont turn around

    da komisar's in town
  4. Makloda,

    we should apply for some government sponsored loans. Commerzbank will be definitely generous ! :D