- Commerzbank's Lead Executive's Contract Not Renewed - Decrease in Federal Shares Happens
Commerzbank's CEO, Manfred Knof, has opted not to extend his contract, which concludes at the end of 2025. He broke the news to Supervisory Board Chairman Jens Weidmann, and the DAX firm confirmed this shortly after market close. The Supervisory Board will promptly start the hunt for Knof's successor.
Simultaneously, the federal government has initiated selling off its Commerzbank shares. The Federal Financial Supervisory Authority revealed plans to sell approximately 53.1 million shares to institutional investors through an expedited offering process. As a result, the government's stake in Commerzbank will decrease from approximately 16.5% to 12.0%. At Tuesday's closing price, the sale value amounts to roughly €670 million, although price discounts are typically applied in such transactions.
Commerzbank has emerged from difficult times
Knof, who has led the bank since 2021, has intensified the bank's austerity measures and accelerated its restructuring. Thousands of positions have been eliminated, and the branch network has significantly shrunk. Thanks to these efforts, Commerzbank's financial situation has improved considerably.
"Without Manfred Knof, Commerzbank would not have the prominence it enjoys within European banks today," said Supervisory Board Chairman Weidmann. "Under his strong leadership, the bank underwent quick restructuring, its business model was refocused, and the bank aligned itself with sustainability."
Last year, Commerzbank, Deutsche Bank's main competitor, reported an unprecedented profit of around €2.2 billion. Meanwhile, the German government also aims to fully divest from Commerzbank, which was partially nationalized during the 2008 global financial crisis. This decision was announced last week.
Knof admitted that he spent the summer break reflecting on this career move, and he will remain available until the end of his contract.
Commerzbank's CFO, Bettina Orlopp (54), is widely regarded as the most likely candidate to succeed Knof. Long-standing rumors suggest that she has aspirations for the chairman position. Recent reports indicate disagreements between Knof and Orlopp, but Orlopp declined to comment on her interest in the top job at Commerzbank during a bank conference.
Bailout during the financial crisis
The German government prevented Commerzbank, which had absorbed the struggling Dresdner Bank during the global financial crisis, from collapsing by injecting vast sums of public money. In 2008 and 2009, Commerzbank received €18.2 billion in capital injections from the Financial Market Stabilization Fund. Out of this, €13.15 billion has already been repaid to the financial agency.
Even following the current share sale, the government will remain Commerzbank's largest individual shareholder. The financial agency has announced no further Commerzbank share sales for the next 90 days, except in certain exceptional circumstances.
- The reduced government stake in Commerzbank due to the share sale could impact the bank's savings rate, as the government might not have as much influence in its financial decisions.
- Given Commerzbank's improved financial situation under Knof's leadership, the bank could potentially increase its savings rate, using the profits from its operations more efficiently.
