Postbank listing mishaps castshadow over stock market

4th June 2004, Comments 0 comments

4 June 2004 , BERLIN - Postbank Chief Wulf von Schimmelmann is insisting that the planned stock listing of Germany's biggest retail bank would go ahead despite a series of mishaps that have surrounded the build-up of the group's share market debut this month. Indeed, the sell off by the German post office, Deutsche Post AG of a 49.9 percent stake in its Postbank offshoot was suppose to set the stage for a rebound in Germany's dormant financial markets and to give fresh momentum to Europe's initial public o

4 June 2004

BERLIN - Postbank Chief Wulf von Schimmelmann is insisting that the planned stock listing of Germany's biggest retail bank would go ahead despite a series of mishaps that have surrounded the build-up of the group's share market debut this month.

Indeed, the sell off by the German post office, Deutsche Post AG of a 49.9 percent stake in its Postbank offshoot was suppose to set the stage for a rebound in Germany's dormant financial markets and to give fresh momentum to Europe's initial public offering business.

But with only days to go before Deutsche Post begins the book building process for the June 21 launch of what is billed as one of Europe's largest IPO's this year, the planned sale of 82 million Postbank shares has turned sour.

Deutsche Post is reported to be considering taking legal action against the offering's lead investment bank, Deutsche Bank, after the leak last week of an internal Deutsche Bank document, which claimed that Postbank was worth up to 25 percent less than the price tag Deutsche Post had placed on Germany's largest retail bank.

While Deutsche Post chief Klaus Zumwinkel had insisted that he wanted the Postbank IPO to reach EUR six billion or EUR 36.6 a share, according to the leaked document Deutsche Bank valued Postbank at between EUR 4.4 billion and EUR 5.3 billion. Analysts are talking about a share price of around EUR 30.

An embarrassed Deutsche Bank was forced to apologise to Deutsche Post with a furious Zumwinkel saying he would not be dictated to and Deutsche Post forced to insist that the sell off the stake would proceed, denying market rumours that the listing was to be shelved.

But considering the somewhat jittery state of global equity markets, analysts have been saying that Deutsche Post had pitched the Postbank offering too high and that the Bonn-based postal and logistics group would now be battling to reach more than about EUR 4.5 billion for the listing.

"You will see us here at 09.00 am June 21," von Schimmelmann told German television ARD Thursday, referring to the morning of Postbank's planned stock market launch.

Von Schimmelmann described the leaking of the Deutsche memo as "premature" and said that he was convinced that the share price would correctly reflect the value of the group.

His comments, however, followed fresh German media reports claiming that the government would argue that the listing should be abandoned if the share price came in at below EUR 32.

With the German Government holding a 63 percent stake in Deutsche Post, Chancellor Gerhard Schroeder's Social Democrat-led coalition like several of its European partners have been hoping to use state sell offs as a way of shoring fragile public finances.

However, after a hiatus of two years only two companies have so far this year dared to mount public offerings in Germany's less-than- inspiring equity market with three companies pulling out of their listings and postponing them until later in the year in the hope of more favourable market conditions.

The meagre set of IPO's so far in Germany this year compares to 56 listings in Europe as a whole during the first quarter of the year with 39 of those new listings being launched in London, the archrival of Germany's financial capital Frankfurt.

But the mess surrounding Postbank 's listing casts a shadow over Frankfurt's reputation as a leading world financial centre with concerns that cancellation of the IPO would represent a major blow to Germany's standing as a global financial market centre.

Most investors expect Deutsche Post to push on with the listing, despite the problems that have hit the Postbank IPO.

Last month Deutsche Post considered dropping the listing after it emerged that Deutsche Bank, which is Germany's biggest bank, was weighing up the possibility of launching a takeover bid for Postbank.

This came in the wake of comments by Schroeder calling for Germany's big banks to push forward with mergers so as to bring to an end the fragmented nature of the country's banking industry and to forge what would in effect be a national banking champion that would rival US and Asian global financial powerhouses.

At a stormy shareholders' meeting this week, Deutsche Bank chief Josef Ackermann refused to say whether the bank had considered making a bid for Postbank with shareholders attacking Deutsche's role in the Postbank saga and one stockholder saying it made Germany's biggest bank look amateurish in its handling of the listing.

DPA

Subject: German news

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