Commerzbank to raise €5.3 billion from sale of new shares
23 May 2011Germany's second- biggest bank, Commerzbank AG, plans to raise about €5.3 billion from sale of new shares to help repay state aid.
According to the Frankfurt-based, Commerzbank, it would offer 2.44 billion new shares at £2.18 apiece. The bank further said in its statement that shareholders would be allowed to subscribe to 10 new shares for every 11 already held from 24 May to 6June. New shares would trade on 7June.
Chief executive officer Martin Blessing announced plans in April to repay about €14.3 billion by June through the sale of new shares and use of excess reserves. The bank received over €18 billion euros from the German government after it agreed to take over unprofitable competitor Dresdner Bank two weeks before the collapse of Lehman Brothers Holdings Inc.
Commerzbank shares were up 0.7 per cent at € 3.95 in Frankfurt trading on 20 May. According to analysts, the stock has fallen 29 per cent so far, this year as against its larger German rival Deutsche Bank AG's 6.1 per cent gain, hit by the dilution from the capital increase and its exposure to sovereign debt.
The bank has said that it was seeking to raise a total of €11 billion euros, with €8.25 billion euros coming from investors and €2.75 billion from Germany's bank-rescue fund Soffin, which would maintain its stake of 25 per cent plus one share in the company. Soffin would spend about €1.3 billion on new shares, Commerzbank said today.
The bank said, Allianz SE would fully participate in the rights offer.
According to the bank, on 14 April, it raised €5.7 billion in the first step, helped by the sale of conditional mandatory exchangeable notes, leaving another €5.3 billion to be raised in the rights offer.