Commerzbank Sets Measures to Cut Government Stake, Lift Capital
7:48a ET March 13, 2013 (Dow Jones)
Commerzbank Sets Measures to Cut Government Stake, Lift Capital
By Ulrike Dauer
FRANKFURT--Commerzbank, Germany's second-largest listed bank, said it will take advantage of "attractive" market conditions to conduct a EUR2.5 billion capital increase, as it looks to bolster its balance sheet and take another bold step to reduce government involvement in the bank.
The capital increase will include subscription rights for current shareholders and be voted on at the annual meeting, moved up to April 19 from the original date of May 22.
Commerzbank said the move will allow it to fully repay the remaining EUR1.6 billion in non-voting shares, known as "silent participation," still held by the German government's SoFFin financial markets stabilization fund and the EUR750 million held by Allianz SE (ALV.XE).
After the completion of the capital increase, SoFFin's 25% shareholding in Commerzbank, which it held in addition to the non-voting shares, is expected to decrease to below 20%.
"For us, the repayment of the [non-voting] silent participations and the reduction in the Federal Republic's stake marks the beginning of the end of the Federal Republic's engagement in Commerzbank," the bank said.
Subsequently, the bank will also be able to resume dividend payments in the future, it said. The bank also announced plans for a consolidation, or reverse 1-for-10 stock split, that will reduce the outstanding shares to 583 million shares from 5.83 billion shares, with the price multiplied by 10.
During the financial crisis, the German government injected EUR18.2 billion in Commerzbank to keep the bank afloat in the wake of the ill-timed acquisition of Dresdner Bank.
Along with a 25%-plus-one-share stake, the government received so-called silent participations, essentially non-voting shares, totaling EUR16.4 billion. The bank repaid EUR14.3 billion of the silent participations in 2011, along with a one-time payment of EUR1.03 billion.
As a result of the transaction announced Wednesday, the fully phased-in Basel 3 Common Equity Tier 1 ratio--a key measure of a bank's financial health--will rise to 8.6% from 7.6% as of year-end 2012 on a pro forma basis as of that date. That figure will rise to 9% by the end of 2014, Commerzbank said.
-Write to Ulrike Dauer at ulrike.dauer@dowjones.com
(END) Dow Jones Newswires
March 13, 2013 07:48 ET (11:48 GMT)
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