Commerzbank boosts capital by 700 mn euros
Commerzbank, Germany's second-biggest bank needing 5.3 billion euros in fresh funds, said Wednesday a repurchase of securities will beef up its core capital by more than 700 million euros ($910 million).
The repurchase of 1.27 billion euros of so-called trust preferred securities "will have a one-off positive effect of more than 700 million euros on our consolidated results and will result in a respective increase of Core Tier 1 capital," Commerzbank said in a statement.
"The transaction marks another step in optimising our capital structure in light of the transition to the new regulatory requirements."
Investors had from December 5-13 to decided whether to sell the securities back to Commerzbank.
Last week, the European Banking Authority said German banks needed to raise 13.1 billion euros in new capital to withstand future financial shocks.
According to the EBA's calculations, Deutsche Bank, the country's biggest, needed 3.2 billion euros and Commerzbank, the number two, needed 5.3 billion euros.
Analysts and investors have speculated about whether Commerzbank would be in a position to raise the capital under its own steam, or require state funding after it already had to be bailed out in the 2008-2009 financial crisis which left the government with a 25-percent stake.
The bank has said it can manage on its own.
Investors welcomed the news, with Commerzbank shares showing a gain of 3.68 percent to 1.21 euros on the Frankfurt stock exchange in late afternoon trading.
© 2011 AFP