2024-09-05 08:09:37
The federal government wants to sell its shares in Commerzbank. Why? And what does that mean for investors?
The crash came suddenly and it was severe: In the wake of the global financial crisis, Commerzbank stumbled so badly that it was on the verge of collapse. But the federal government stepped in and saved Germany’s second-largest financial institution with capital aid totaling 18.2 billion.
Since then, the federal government has held a large package of Commerzbank shares. Even though 13.15 billion euros have already been repaid, the taxpayer still has a stake in the bank. Now, around 16 years later, that is set to change. As the federal finance agency responsible and the Ministry of Finance announced on Tuesday evening, the government wants to “gradually” sell off its shares.
Why is this step being taken now? And what consequences will it have for the markets and individual investors? t-online answers the most important questions.
Because Commerzbank has now largely stabilized economically and has good prospects. The government can therefore justify scaling back its commitment to saving the bank.
At least that is how Florian Toncar, Parliamentary State Secretary in the Federal Ministry of Finance and Chairman of the relevant inter-ministerial steering committee, explains it: Commerzbank is once again a stable and profitable institution. “It is therefore necessary for the federal government to gradually divest itself of the shares in the successfully stabilized institution.”
Both of these are still open at the moment. When asked, neither the Ministry of Finance nor the financial agency responsible for the sale commented on the matter. The ministry simply said that the announced sale was a “limited first step” and no further details were disclosed.
The reason for this tight-lippedness is probably that the government could, in the worst case, cause distortions in the markets with each further specification. The sale of the share package in question should be carried out “transparently and in a way that protects the market,” the finance agency said in a statement. In an initial reaction, Commerzbank shares fell by more than 2 percent on Wednesday, but in the afternoon they were only 1.6 percent lower than the previous day.
The federal government currently holds 16.49 percent of Commerzbank shares through the Financial Market Stabilization Fund (FMS). A stock exchange announcement informing about any sale of shares will only have to be sent out again once the federal government’s shareholding falls below the 15 percent threshold.
The income that the federal government generates from the planned sale will flow back into the fund’s assets in accordance with the rules of the FMS special fund. Use within the federal budget is therefore not planned or possible. The sale will therefore not reduce the still large financial holes in the 2025 federal budget, nor will it be possible to use the money for investments, as economist Martin Werding is calling for.
At the current price level, the remaining state stake in the bank is worth around 2.5 billion euros. At the time, the share package cost around five billion euros. In order to make a profit, a share price of just under 26 euros would have to be reached – Commerzbank shares were recently quoted at just under 13 euros.
Unlike the rescue of Lufthansa, which the state helped out during the Corona pandemic, the Commerzbank commitment is likely to increase the billion-euro deficit in the FMS. The shares are expected to be sold at a loss, which the taxpayer will ultimately be left with.
Commerzbank recently recorded the greatest success in its 150-year history. In the most recent quarter, the bank achieved its best result in 13 years. The figures for the second quarter met analysts’ expectations and in some cases exceeded them, which is also due to higher interest rates, which are making it easier for banks to do good business again.