- Commerzbank's Head Fails to Renew Contract, Resulting in Reduction of Federal Stake
The head honcho of Commerzbank, Manfred Knof, decided against extending his contract, which ends in 2025. He foolishly shared this news with Jens Weidmann, the chairman of the supervisory board, shortly after the clock struck closing time in the stock market. Coincidentally, or perhaps not, the German government started peddling off its Commerzbank shares to some ruthless investors.
The German Federal Finance Authority disclosed after the market closed that it offloaded approximately 53.1 million shares to these unsuspecting investors in a swift transaction. As a result, the German government's stake in the bank will plummet from approximately 16.5% to 12.0%.
Knof has been the bank's puppeteer since 2021. He's been ruthless in his decision-making, slicing through thousands of jobs and slashing the branch network. Against all odds, the bank managed to turn its fortunes around last year, reporting a record profit of around 2.2 billion euros.
The bank, which is a fierce competitor to Deutsche Bank, had the German government as one of its key investors after it was partially nationalized during the 2008 global financial crisis. At the time, the government saved the Frankfurt-based bank, which had gobbled up the struggling Dresdner Bank, with a hefty dose of public funds. The Commerzbank received a whopping 18.2 billion euros in capital aid from the FMS in 2008 and 2009. According to the financial agency, around 13.15 billion euros have been repaid so far.
After the current share sale, the German government will still be the bank's largest individual shareholder. The financial agency announced that no more Commerzbank shares will be peddled off for the next 90 days, unless specific exceptions apply.
The German Federal Government, being the bank's largest individual shareholder, made the decision to sell its shares to these investors. This action by the German Federal Finance Authority could potentially impact the Federal Government's control over Commerzbank's future decisions, given its reduced stake.
