Berlin had to spend some 18 billion euros in the midst of the financial crisis of 2008-2009 to partially nationalise Commerzbank and provide guarantees on its assets. The institution was then on the verge of bankruptcy.
The German state, which came to the aid of Germany’s second largest bank, Commerzbank, at the height of the financial crisis in the 2000s, will gradually withdraw from the capital of the group, in which it holds a 16.5% stake, the Federal Finance Agency announced on Tuesday.
“The bank’s economic situation has been steadily improving since 2021,” said Eva Grunwald, director of Finanzagentur, in a statement. “The federal government is responding (…) by reducing its stake in Commerzbank and beginning its divestment,” she added.
Berlin had to spend some 18 billion euros in the midst of the financial crisis of 2008-2009 to partially nationalise Commerzbank and provide guarantees on its assets. The institution was then on the verge of bankruptcy.
Stable and profitable
The finance agency did not give a timetable for its withdrawal on Tuesday. “The sale of the relevant share package will be done in a transparent, non-discriminatory and market-friendly manner,” it said in its statement.
The commitment of the German state at the time of the financial market crisis “made it possible to avoid a domino effect with unpredictable macroeconomic consequences”, notes the agency’s director.
Berlin paid around 26 euros per Commerzbank share at the time. The current share price of the bank, listed on the Frankfurt Stock Exchange, is now lower. The stock closed on Tuesday at 13.09 euros. At its lowest point in May 2020, the share was worth around 3 euros.
The bank with the yellow logo has undergone several cost-cutting and restructuring plans in recent years. Commerzbank “is once again a stable and profitable institution,” the Federal Finance Agency said in its press release.
Like the entire banking sector, its results have been driven by the rise in interest rates since July 2022.
