COMMERZBANK, Germany’s second largest lender, is to pull out of shipping finance and commercial property lending as stricter liquidity requirements force it to cut back on capital intensive activities, it has revealed.
The bank, which has twice been bailed out by German taxpayers, said the decision marks the first step in a “rigorous” review of all its businesses, with more details to be announced later this year.
Shipping and property were two of the worst hit sectors during the crisis, forcing Commerzbank to scale back the size of its lending and reduce its exposure.
The move marks a U-turn on decisions outlined by the bank in March to merge the two sectors into a joint real-estate and ship-finance division.
Commerzbank’s Eurohypo was one of the biggest commercial property lenders in the years up to the financial crisis but the unit’s European government bond holdings have since saddled Commerzbank with losses amid the sovereign-debt crisis.
The bank had initially been ordered by the European Commission to sell Eurohypo by 2014 as a pre-condition for approving an €18bn bailout in the financial crisis. But volatile market conditions and a crisis in real estate financing left Commerzbank unable to find a buyer for the loss-making lender.
The agreement was revised in March to wind down Eurohypo instead while retaining a smaller real estate lending business, which would have €5bn a year to lend in four countries; Germany, the UK, Poland and France.
•Separately, Commerzbank said yesterday it would sell 128.3m of new shares in order to pay staff bonuses worth more than €150m.
Around 60 per cent of the employees have decided they would not keep the shares but would instead sell them immediately to institutional investors, with Commerzbank itself and Deutsche Bank AG acting as bookrunners.