Commerz state deal backed

THE GERMAN government put the seal on its acquisition of more than 25 per cent of Commerzbank over the weekend, after the bank&rsquo;s shareholders approved a share issue as part of state support for the lender.<br /><br />In a near unanimous vote at the bank&rsquo;s annual general meeting, investors approved the issue of 295m new shares at six euros apiece, the bank said, giving the German government a stake of 25 per cent plus one share.<br /><br />The state has ploughed &euro;18bn (&pound;16bn) into the country&rsquo;s second-largest bank in return for the equity stake, which it will take on via its emergency &ldquo;SoFFin&rdquo; bank rescue fund.<br /><br />&ldquo;With a Tier 1 ratio of around 10 per cent, Commerzbank is weatherproof and will implement its new strategy without delay,&rdquo; said chairman Martin Blessing.<br /><br />The bank had an inauspicious start to the year, reporting a first quarter loss of &euro;861m, compared with a profit of &euro;236m in the same period the previous year.<br /><br />Much of the loss was attributed to last year&rsquo;s acquisition of Dresdner Bank from rival Allianz, which was completed in January, shaving &euro;290m from the bank&rsquo;s bottom line.<br /><br />The dismal performance saw the bank ditch its dividend and halt all bonuses in a bid to preserve capital.<br /><br />However, Blessing forecast at the time that the bank would return to profit by 2011 at the latest, with an operating profit of more than &euro;4bn by 2012.<br /><br />The bank is undergoing a streamlining process as part of conditions set by the European Commission governing its approval for the German government to offer the firm financial support.