Germany Plans To Raise Funds By Selling Stakes In State-Owned Companies

Summary

  • Germany is actively considering selling its stakes in various companies it owns out of more than 100.
  • Christian Lindner, the Finance Minister, is open to selling the government’s remaining 15% stake in Commerzbank despite no imminent plans.
  • Deutsche Bank, having accomplished much of its restructuring plan, contemplates acquiring banks such as Commerzbank and ABN Amro.
  • Due to ongoing press speculation and previous remarks, a potential move may likely occur.
  • Germany’s shares in Commerzbank, which date back to the 2008 global financial crisis, continue to be unprofitable for the government.

Germany Eyes Funding Options

Germany is examining numerous strategies to generate cash, which includes staging off its ownership in over 100 companies, one of which involves its remaining 15% shares in Commerzbank. Christian Lindner, the Finance Minister, is open to this idea, albeit no immediate plans are in place, according to a source acquainted with his line of reasoning.

Strategic Move for Deutsche Bank

A Commerzbank merger could benefit Deutsche Bank by offering an opportunity to move away from unstable investment banking revenues, thereby promoting long-term stability. Such a factor may encourage the German government to consider this option, as indicated by an anonymous source. Furthermore, Deutsche Bank has heightened its internal talks concerning potential acquisitions of banks including Commerzbank and ABN Amro, as reported by Bloomberg News, although no sources were named.

Stakeholder Comments

Representatives from the finance ministry, Commerzbank, and Deutsche Bank weren’t accessible immediately for comments post-business hours. Deutsche Bank chose not to comment. When it comes to stock performance, Deutsche Bank saw a dip of 1.23% closing at 12.05 euros resulting in a bank evaluation of 25 billion euros ($27.37 billion). Commerzbank’s stocks held steady at 11.35 euros, valuing them at 14 billion euros.

The Complexities of a Potential Merger

A merger would be hampered by Deutsche Bank’s low valuation, and its assets would require markdown. This could lead to strenuous job cuts to capitalize on combining overlapping businesses, given the bank’s trade fraction of its book value.

Speculations on Upcoming M&A Activities

Deutsche Bank Chairman Alexander Wynaendts mentioned in November that the company is open to possible M&A if the right opportunity arises. However, according to Anke Reingen, an RBC Europe analyst, a significant transaction seems improbable in the near future, due to numerous challenges piling up.

Historical Stake in Commerzbank

Germany’s contribution in Commerzbank is traced back to the 2008 financial crisis and is still running at a loss for the government. Sueddeutsche Zeitung reported on Dec. 28 that Germany appointed an investment bank to review the Commerzbank shares, but the advisor’s name was not disclosed.

A Potential Partner for UniCredit

Commerzbank has also been viewed as a potential partner for UniCredit, which is already established in Germany through HVB. The entities reportedly held merger discussions prior to Russia’s invasion of Ukraine in 2022. A UniCredit spokesperson declined to comment further on the matter.

($1 = 0.9133 euros)

Potential Market Impact

The potential sales of stakes and mergers can have notable impacts on the forex market. Traders should stay vigilant regarding assets such as the Euro, Deutsche Bank, and Commerzbank shares, which could experience volatility amid these developments.

PIP Penguin
Logo