German Government to Begin Exit From Commerzbank

By Adria Calatayud

Germany plans to reduce a stake it built in Commerzbank during the financial crisis of 2008 currently valued at about 2.56 billion euros ($2.83 billion), the latest move by a European government to exit crisis-era bailouts.

The German government took a stake in the lender in 2008 and 2009 in a bid to protect financial stability. The government now wants to begin a process to exit its shareholding in Commerzbank, which currently stands at 16.49%, after an improvement in the bank's financial situation, the German finance agency said late Tuesday.

The move mirrors those of other European governments in recent years, a trend that picked up as bank stocks rallied after high interest rates boosted their earnings and many of them splurged on returns to shareholders.

Ireland's AIB Group earlier this week said it would buy back shares from the Irish government as part of a process to repay taxpayers for their support.

In the U.K., the government has been offloading shares in NatWest Group--previously known as Royal Bank of Scotland--in recent years. Italy has cut its stake in Banca Monte dei Paschi di Siena as well, and Spain backed a merger of state-owned Bankia with CaixaBank that diluted the state's ownership in the enlarged entity when the deal was completed in 2021.

Commerzbank received 18.20 billion euros in 2008 and 2009, of which around 13.15 billion euros have been repaid to date, and the government retains a stake through its Financial Market Stabilization Fund, the German finance agency said. The bank has been profitable since 2021 and the government decided to take a first step toward selling its stake, the agency added.

The government's 16.49% stake in Commerzbank is currently valued at about 2.56 billion euros, based on Commerzbank's market value of 15.51 billion euros as of Tuesday's close, according to FactSet. Commerzbank's shares have gained 22% since the start of the year, while the Stoxx Europe 600 Banks index has risen 17%.

The German finance agency said the sale will be transparent, nondiscriminatory and market friendly.

Write to Adria Calatayud at adria.calatayud@wsj.com

(END) Dow Jones Newswires

September 04, 2024 02:22 ET (06:22 GMT)

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