Commerzbank struggles as shares fall

Commerzbank tower

Germany's Commerzbank saw shares continue fall by 3.8 percent at the start of the week after a report in daily newspaper Handelsblatt said the bank needed to raise as much as three billion euros in fresh capital this year.

Commerzbank, which is Germany's second largest financial institution, was first rocked by the reports on Tuesday, leading Chief Financial Officer Eric Stutz to announce in a statement that the bank had "no plans" to repay state aid in the short term.

On Wednesday, a Commerzbank spokesman said to Reuters that the CFO statement "still stands."

Structure remains

But according to reports from yesterday, a research note from UBS says that the capital structure remains the "overriding issue" for Commerzbank.

Reuters reported that the note read: "In order to achieve a core tier 1 ratio of seven percent a level we regard as reasonable) while repaying the 17.2 billion euros in silent participation, the company has to raise more than 12.2 billion euros in common equity, in our view."

More than enough

However, since these reports surfaced, Commerzbank Chief Executive Martin Blessing has said that the financial lender has "more than enough" capital to support its business.

According to Blessing, core capital ratio at the end of 2009 was "a good 10.5 percent". In a news conference yesterday afternoon he said: "That is more than we need for our client-driven, long-term oriented business model."

Yesterday, at 1013 GMT, Commerzbank shares were down 2.8 percent at 5.485 euros. The DJ Stoxx index of European banks .SX7E was down 1.2 percent.

The bank, which plans to start repaying part of its 18.2 billion euros of government bailout money by 2012, had attempted on Tuesday to brush aside a disastrous 2009 with a pledge to do better in 2010.

Matthew Buttell

Matt Buttell graduated from Bath Spa University in 2006. Since then he has written for several publications, before moving to the web. He now writes solely for the internet, continuing to cover key business issues while managing his own personal blog.

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