Germany gets timing wrong with Commerzbank sale
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.
By Liam Proud
LONDON, Sept 4 (Reuters Breakingviews) -The German government can hardly be accused of rushing things with a planned divestment of its 16.5% holding in 16 billion euro Commerzbank CBKG.DE. Berlin has owned shares in the lender since the 2008 crisis, and may only initially offload 3% to 5%, Bloomberg reported on Wednesday citing people familiar with the matter. Still, the German authorities are probably selling too early.
The Federal Finance Agency, which manages the position for the government, on Tuesday evening said that Commerzbank’s situation had steadily improved in recent years and that it was therefore logical to reduce the holding. Unless the economic situation takes a sudden turn for the worse, such as a major recession, the implication is that Germany will keep offloading shares.
In one sense, it seems like an opportune moment to sell. Commerzbank’s stock has risen 130% in the past three years, compared with a 40% increase for closest rival Deutsche Bank DBKGn.DE. Investors have cheered the positive effect of higher euro zone interest rates on the bottom line, as well as a major cost-cutting effort under CEO Manfred Knof.
It’s still possible, however, that Berlin will regret the timing of the sale. First, Commerzbank’s valuation is still low in absolute terms, at around half forward tangible book value. Offloading shares now jars with analysts’ average forecasts, which envisage Knof pumping out a return on tangible equity of roughly 9% over 2025 and 2026 and 10% in 2027. If that trajectory becomes reality, the valuation would rise much closer to tangible book value, implying further upside for the shareholders.
There’s also the question of M&A. Right now, the government has a privileged role in negotiating terms and vetoing any deal with long-rumoured suitors like Deutsche and Italy’s UniCredit CRDI.MI. That influence shrinks with every share it sells. If it gets rid of the stake entirely, Berlin would have to rely on a much weaker set of regulatory tools to influence a deal. It would also miss out on any takeover premium a suitor would be likely to pay.
And taxpayers are not getting an adequate amount of money to compensate for that loss of influence. Selling 5% would raise less than 800 million euros, at current market prices. Even offloading the whole stake would be worth about 2.5 billion euros, equivalent to 0.1% of German government spending in 2023. Having waited this long, Berlin might be better off sitting tight.
Follow @Breakingviews on X
CONTEXT NEWS
The German government plans to sell 3% to 5% of Commerzbank, Bloomberg reported on Sept. 4, citing people familiar with the matter. It currently owns a 16.5% stake.
The Federal Finance Agency said on Sept. 3 that it intended to reduce its holding in the Frankfurt-based lender, without specifying how much it would offload. Eva Grunwald, member of the agency’s executive board, said that the bank’s situation had steadily improved since 2021, and that the logical response was for the government to begin exiting the position.
Shares in Commerzbank were down 0.8% to 12.73 euros as of 0729 GMT on Sept. 4, roughly in line with the performance of the Euro STOXX Banks Index.
Graphic: Commerz's price-book valuation has drifted up recently https://reut.rs/3MxgEEN
Editing by Francesco Guerrera, Streisand Neto and Oliver Taslic
Asset collegati
Ultime news
Disclaimer: le entità di XM Group forniscono servizi di sola esecuzione e accesso al nostro servizio di trading online, che permette all'individuo di visualizzare e/o utilizzare i contenuti disponibili sul sito o attraverso di esso; non ha il proposito di modificare o espandere le proprie funzioni, né le modifica o espande. L'accesso e l'utilizzo sono sempre soggetti a: (i) Termini e condizioni; (ii) Avvertenza sui rischi e (iii) Disclaimer completo. Tali contenuti sono perciò forniti a scopo puramente informativo. Nello specifico, ti preghiamo di considerare che i contenuti del nostro servizio di trading online non rappresentano un sollecito né un'offerta ad operare sui mercati finanziari. Il trading su qualsiasi mercato finanziario comporta un notevole livello di rischio per il tuo capitale.
Tutto il materiale pubblicato sul nostro servizio di trading online è unicamente a scopo educativo e informativo, e non contiene (e non dovrebbe essere considerato come contenente) consigli e raccomandazioni di carattere finanziario, di trading o fiscale, né informazioni riguardanti i nostri prezzi di trading, offerte o solleciti riguardanti transazioni che possano coinvolgere strumenti finanziari, oppure promozioni finanziarie da te non richieste.
Tutti i contenuti di terze parti, oltre ai contenuti offerti da XM, siano essi opinioni, news, ricerca, analisi, prezzi, altre informazioni o link a siti di terzi presenti su questo sito, sono forniti "così com'è", e vanno considerati come commenti generali sui mercati; per questo motivo, non possono essere visti come consigli di investimento. Dato che tutti i contenuti sono intesi come ricerche di investimento, devi considerare e accettare che non sono stati preparati né creati seguendo i requisiti normativi pensati per promuovere l'indipendenza delle ricerche di investimento; per questo motivo, questi contenuti devono essere considerati come comunicazioni di marketing in base alle leggi e normative vigenti. Assicurati di avere letto e compreso pienamente la nostra Notifica sulla ricerca di investimento non indipendente e la nostra Informativa sul rischio riguardante le informazioni sopra citate; tali documenti sono consultabili qui.
