Page last updated at 16:56 GMT, Thursday, 8 January 2009

Commerzbank is part nationalised

commerzbank sign
Germany's second biggest bank will now be part state-owned

Commerzbank, Germany's second-biggest bank, has said it is to be partly nationalised, with the government taking a 25% stake, plus one share.

The bank is to receive 10bn euros (9bn; $13.7bn) in a second injection pf capital from the German banking sector stabilisation fund, Soffin.

Commerzbank had been seeking help after its 5.1bn euro takeover of rival Dresdner Bank from insurer Allianz.

It shares had fallen to a record low on Thursday ahead of the announcement.

In a statement, the bank said: "The federal government will hold a stake of 25% plus one share in the new Commerzbank."

Government support

Commerzbank originally announced its purchase of Dresdner in September, for 9.8bn euros.

The government's stake is not a partial privatisation but rather shows our responsibility towards one of the biggest German players in the financial market
Torsten Albig, Finance Ministry spokesman

Then, in November, with bank share prices falling, it announced that the takeover would be speeded up, while the price paid to Allianz would come down to 5.1bn euros.

Commerzbank already owns 60% of Dresdner and the remaining 40% will be purchased this month.

Under the revised deal, the bank no longer had to issue new shares to fund its takeover, but was able to pay in cash.

A major factor in Commerzbank's ability to pay more cash was the initial 8.2bn euro bail-out it received from the German government's rescue fund, Soffin, on 2 November.

The German government set up its bank rescue scheme, worth up to 500bn euros, last autumn, in order to help secure the financial stability of its banking sector.

Finance Ministry spokesman Torsten Albig said that the government's action was designed to secure Commerzbank's future.

"The government's stake is not a partial privatisation, but rather shows our responsibility towards one of the biggest German players in the financial market, which, with a core capital ratio of around 10%, will now be able to position itself successfully and competitively."


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