Germany plans to cut its stake in Commerzbank, currently valued at about €2.56 billion ($2.83 billion), according to The Wall Street Journal.
The German government bought a stake in the lender in 2008 and 2009 in an effort to protect financial stability. Now it wants to begin the process of exiting its stake in Commerzbank, which currently stands at 16.49 per cent, once the bank’s financial situation improves.
The trend intensified across Europe as bank shares rose after high interest rates boosted their earnings, with many of them splurging on shareholder returns. Irish group AIB said earlier this week it would buy back shares from the Irish government as part of a process to compensate taxpayers for their support.
In the UK, NatWest Group, formerly known as Royal Bank of Scotland, has been selling shares in recent years. Italy has also cut its stake in Banca Monte dei Paschi di Siena, while Spain has backed the merger of state-owned Bankia with CaixaBank.
Commerzbank received €18.20 billion in 2008 and 2009, of which about €13.15 billion has been paid out so far. The government retains a stake through its Financial Market Stabilisation Fund, the German financial agency said. The bank was profitable since 2021 and the government decided to take the first step to sell its stake, the agency added.
The government’s 16.49% stake in Commerzbank is currently valued at about 2.56 billion euros, based on Commerzbank’s market value of 15.51 billion euros at the close of trading on Tuesday. Commerzbank shares rose 22% since the start of the year, while the Stoxx Europe 600 Banks index climbed 17%.
