Commerzbank AG (CRZBY)

[Enterprising Investor]

Schaeuble In No Rush to Sell Commerzbank Stake as Shares Wilt (8/28/13)

By Rainer Buergin & Birgit Jennen

German Finance Minister Wolfgang Schaeuble said he has no plans to sell the government’s stake in Commerzbank AG (CBK) any time soon because the share price is too low to justify a divestment.

“It’s not the federal government’s wish to be an entrepreneur, but I happen to know at what price we took on the stake and where the price is now,” Schaeuble said in an Aug. 27 interview. “I’m not in sales negotiations with anyone.”

Germany, through the government’s Soffin bank rescue fund, became the Frankfurt-based lender’s biggest shareholder after an 18.2 billion-euro ($24 billion) bailout in 2009 in the aftermath of Lehman Brothers Holdings Inc.’s collapse. The stock has declined more than any other DAX Index member since the first part of the rescue was unveiled on Nov. 3, 2008. In that time, it has lost 83 percent of its value, compared with a 64 percent gain in the benchmark.

The shares have climbed more than 50 percent from an intraday low on July 4 amid speculation an international competitor may purchase the government’s 17 percent stake to gain access to clients including the small and medium-sized companies that make up Germany’s Mittelstand, the backbone of the country’s economy.

Commerzbank shares have also benefited after the company reported second-quarter profit that fell less than analysts had estimated and said it’s making headway in raising capital levels.

Chief Executive Officer Martin Blessing, who has increased capital five times in the past four years in a bid to repay the government and bolster the bank’s financial strength, is firing staff as the bank wrestles with souring shipping and commercial real estate loans.

Takeover Speculation

Standard & Poor’s lowered the company’s debt rating to A-, four levels above junk, two months ago, saying poor economic conditions mean it will struggle to boost earnings sustainably.

A full or partial takeover by an international bank is “conceivable,” Florian Rentsch, the economy minister for the state of Hesse, said in an interview with Handelsblatt today, adding that he would welcome Commerzbank making its way independently.

Soffin wants to sell the stake over the next six months and foreign banks including BNP Paribas SA (BNP), Banco Santander SA (SAN) and UBS AG (UBSN) are interested, WirtschaftsWoche magazine reported on July 20, citing people close to the rescue fund it didn’t name.

To contact the reporters on this story: Rainer Buergin in Berlin at [e-mail]; Birgit Jennen in Berlin at [e-mail]

http://www.bloomberg.com/news/2013-08-28/schaeuble-in-no-rush-to-sell-commerzbank-stake-as-shares-wilt.html