Progressively, Bund is distancing itself from Commerzbank.
In 2008 and 2009, the federal government provided Commerzbank with over 18 billion euros during the financial crisis to help prevent its collapse. Since then, the bank has recovered and has returned billions of euros to the government. Now, the government plans to sell its shares in Commerzbank gradually to generate more billions.
As per reports, the state is planning to decrease its ownership in Commerzbank. The Federal Republic of Germany's finance agency announced that the federal government's intervention in Commerzbank during the financial crisis in 2008 and 2009 was crucial in restoring financial market stability. Since Commerzbank has become a stable and profitable institution once again, it's now the right time for the federal government to sell off its shares.
Florian Toncar, Parliamentary State Secretary in the Federal Ministry of Finance and the chairperson of the responsible interministerial steering committee, explained that Commerzbank's financial situation has improved significantly since 2021. Therefore, the federal government is taking the appropriate step by reducing its stake in Commerzbank and initiating its exit.
The sale of the relevant share package will be done in a transparent and market-friendly manner, as announced by the finance agency. Further steps for sale will be decided upon by the interministerial steering committee at an appropriate time.
It's worth noting that the federal government didn't participate in Commerzbank's share buyback programs recently, which slightly increased its stake in the bank. Commerzbank reported its highest profit in 15 years at the end of the previous year. The group's net profit rose by 55 percent to 2.2 billion euros and revenue surged more than ten percent to 10.5 billion euros compared to the previous year.
CEO Manfred Knof, who took over leadership of Germany's second-largest listed bank in 2021, implemented major transformation changes. Job cuts and streamlining of the branch network have made the bank significantly more profitable. In January, the federal government announced it would sell off more of its corporate holdings, including part of its stakes in Deutsche Post and Deutsche Telekom, and converted them into cash.
Commerzbank faced financial distress during the 2008 financial market crisis and received a total of 18.2 billion euros in capital aid from the Financial Market Stabilization Fund (FMS) to maintain financial market stability. As of now, around 13.15 billion euros have been repaid. The federal government currently holds a 16.49 percent stake in Commerzbank through the FMS, which is valued at around 15.8 billion euros on the stock market.
The federal government's plan to sell its shares in Commerzbank gradually will generate more funds, as mentioned earlier. The improved financial situation of Commerzbank, as seen in its highest profit in 15 years and significant profitability increase under CEO Manfred Knof's leadership, makes this action appropriate.
