The German government is weighing up the sale of its 16 per cent share in Commerzbank, the country’s second-biggest lender, and is seeking expert advice on the future of its stake.
Shares in Commerzbank have fallen almost 40 per cent over the last year. A proposed merger with its bigger rival Deutsche Bank fell through in April and on Wednesday the lender said it faced a “very challenging environment” this year.
The German finance ministry said today that it was looking for an adviser to “develop strategic recommendations for the federal equity stake management”.
Shares in the lender had fallen 2.7 per cent by 3pm UK time to €5.25.
A public tender document from earlier this week showed the Federal Finance Ministry, which owns the stake, was looking for an expert to analyse “proceeds from core business areas, cost savings, contributions to digitalisation” as well as “potential further synergies”.
German financial newspaper Boersen Zeitung was the first to report the announcement today.
Germany’s government came to own shares in Commerzbank during the 2008 financial crisis when it bailed out the bank. It is the biggest shareholder by a considerable distance.
Shares have fallen over 90 per cent over the last 10 years, meaning the government – and German taxpayers – have taken a big loss.
The government encouraged the proposed merger between the country’s two biggest banks, seeing it as a chance to reinvigorate its financial sector, which has struggled since the financial and Eurozone crises.
Merger talk drove up Commerzbank’s share price but since the end of April when the deal fell through shares have tumbled over 30 per cent.
On Wednesday, Commerzbank posted net profit of €271m (£249m) in the second quarter of 2019, compared to €272m a year earlier. The figure was boosted by an almost 80 per cent fall in the bank’s tax bill.
The bank warned that “the noticeable worsening of the macroeconomic situation and the increasingly uncertain geopolitical situation” posed challenges in the second quarter.