Germany's Commerzbank to raise 5 billion euros: report

27th August 2010, Comments 0 comments

Germany's second biggest private bank, Commerzbank, wants to raise five billion euros (6.4 billion dollars) in fresh capital to reduce it dependence on the state, a press report said Friday.

A Commerzbank spokesman told Dow Jones Newswires there were no concrete plans at the moment to issue new shares, however.

The government owns 25 percent plus one share of Commerzbank after coming to its rescue during the global financial crisis.

According to the German business daily Handelsblatt, some of the funds raised from the capital increase, which could surpass five billion euros if market conditions are favourable, are to go towards reimbursing the state.

The state holding has weighed on Commerzbank's share price because the bank must pay interest on the money it borrowed, which comes to a total of 18.2 billion euros and gives the government a minority blocking position.

Commerbank was on the edge of bankruptcy in late 2008 after its ambitious but ill-timed purchase of Dresdner Bank coincided with a deepening crisis in the global economy.

German Finance Minister Wolfgang Schaeuble indicated recently that the ruling conservative-liberal coalition in Berlin also wants to unwind its holding in the bank as quickly as possible.

© 2010 AFP

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