commerz
By Oliver Suess, Elisa Martinuzzi and Zijing Wu
Jan. 13 (Bloomberg) -- Commerzbank AG, Germany’s second-
biggest lender, plans to boost capital by buying back debt as it
prepares for new European banking rules.
Commerzbank is funding the purchase by selling as much as
632 million euros ($830 million) of new shares to investors
today. It will use the proceeds to buy back hybrid equity
instruments at prices below par in a tender offer managed by
Credit Suisse Group AG, the Frankfurt-based lender said in
statement today.
The bank, which was forced to tap Germany for 18.2 billion
euros of aid, may book a one-time capital gain of as much as 340
million euros, according to two people with knowledge of the
transaction, who declined to be named because the talks are
private. The deal will boost Commerzbank’s core Tier 1 ratio, a
measure of financial strength, to 10.25 percent from 9.9
percent, they said. Germany’s Soffin financial-rescue fund plans
to keep its stake of 25 percent plus one share in the lender
upon completion of the capital increase, the bank said.
“While this is not the major coup to pay back state aid,
Commerzbank is making use of the low valuation of its hybrid
instruments,” said Konrad Becker, a Munich-based analyst at
Merck Finck & Co. who recommends selling the stock. “The
transaction will lead to a one-time gain for Commerzbank this
year and also help lower future coupon payments and it also
helps improve their capital quality.”
Commerzbank spokesman Reiner Rossmann declined to comment
on the capital gain.
Basel III
European banks are seeking to improve their capital levels
after leaders of the Group of 20 nations in November endorsed
rules, known as Basel III, which will more than triple the
highest-quality capital that banks must hold. Deutsche Bank AG,
Germany’s biggest bank, raised 10.2 billion euros in a share
sale in October.
Commerzbank, which is offering as many as 118.1 million new
shares, has orders for all the shares, according to two people
with knowledge of the sale. Commerzbank narrowed the price range
to between 5.25 euros and 5.35 euros, two people said. The bank
had earlier been offering the shares for as little as 5.15 euros
each. Maximilian Bicker, a spokesman at Commerzbank, declined to
comment on the price range.
Commerzbank declined 13 euro cents, or 2.4 percent, to 5.51
euros as of 11:08 a.m. in Frankfurt trading, giving the lender a
market value of about 6.5 billion euros.
Share Offering
Zurich-based Credit Suisse, Citigroup Inc., Goldman Sachs
Group Inc. and UBS AG are selling the new shares to
institutional investors today, Commerzbank said.
While the transaction will not have “any noticeable
impact” on the bank’s Tier 1 capital ratio, it will result in
an increase of core Tier 1 capital, the lender said. Both ratios
are a buffer against possible losses. The core Tier 1 capital
excludes several capital instruments.
Commerzbank isn’t planning to raise any further capital in
the first quarter, but may consider measures in the future, it
said in a separate statement today.
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