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Wednesday, December 4, 2024

Deutsche Bank & Commerzbank: Downhill after Cerberus exit

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Frankfurt The US financial investor Cerberus pulled the rip cord a good four years after joining Deutsche Bank and Commerzbank – and sent the shares of the two largest German private banks on the downside. Deutsche Bank papers temporarily fell by more than two percent on Tuesday, and Commerzbank papers by more than three percent.

Cerberus’ considerations to buy the state’s stake in Commerzbank from the federal government should have been dealt with. After the block of shares was sold, it was an illusion that Cerberus would take over the state stake, a person familiar with the subject told the Handelsblatt.

In the autumn, according to financial circles, Cerberus Germany boss David Knower signaled his willingness in confidential discussions to consider acquiring the state stake in Commerzbank if the new federal government was ready to sell.

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The FDP has repeatedly spoken out in favor of the federal government, which has held a stake in Commerzbank since the rescue in the financial crisis in 2008 and is still the largest shareholder with 15.6 percent. With the withdrawal of Cerberus, Finance Minister Christian Lindner is now breaking away a put option.

The Liberals have announced that they will evaluate the status and progress of the bank’s restructuring and then examine all options. This includes a sale of Commerzbank shares on the market or – as part of a merger – to another financial institution.

At Commerzbank, joy prevails

At Commerzbank, Cerberus has repeatedly urged greater cost reductions and triggered the resignations of CEO Martin Zielke and Supervisory Board Chairman Stefan Schmittann with a protest letter in the summer of 2020. Many within the money house are therefore happy about the withdrawal of the fund, which is named after the three-headed hellhound from Greek mythology.

“I see the partial exit of Cerberus with a laughing and a crying eye,” said Verdi union secretary Stefan Wittmann, who sits on the supervisory board of Commerzbank, the Handelsblatt. “I am glad that these activists, who always wanted to tell us how to run a German bank, will no longer play a major role in the future. On the other hand, we don’t know who is buying the shares – so there is a certain amount of uncertainty. “

Wittmann sees the debate as to whether and when the state will exit Commerzbank as relaxed. “The major shareholder, the federal government, has not had a calming influence on the bank in recent years – on the contrary: under its aegis, there have been repeated changes in strategy,” says the trade unionist. “We now have to implement our strategy and put Commerzbank on a stable footing – nobody will buy us beforehand anyway. Then politicians have to assess whether they want to have an independent German SME financier or not. “

Commerzbank and Deutsche Bank did not want to comment on the partial exit of Cerberus. No comment was received from the financial investor himself.

Looking back, Cerberus thinks that entry is wrong

Cerberus sells the shares in Commerzbank and Deutsche Bank at a loss, but was able to at least reduce it thanks to the recent price increases at both institutes. The financial investor wants to take the price gains of the past few days and months with the sales, said an insider.

The Commerzbank share has gained more than 15 percent since the beginning of the year alone. “It is logical to reduce the position now and take the price level with you – even if it is below the initial price,” said the insider. Since Cerberus values ​​its funds at market prices, losses have already been booked.

The sales of the share packages are also a portfolio adjustment because minority stakes in banks actually do not fit Cerberus’ approach, the insider said. The financial investor also joined Deutsche Bank and Commerzbank in 2017 because both were rated low. In the meantime, however, Cerberus has also come to realize that, in retrospect, both investments were not a clever move.

“That was his expensive lesson for Cerberus,” wrote Volker Brühl, Managing Director of the Center for Financial Studies at Frankfurt’s Goethe University, on Twitter. Many observers would never have understood the investments in both banks. “For Commerzbank, the uncertainty remains as to how things will proceed.”

According to Brühl, a merger between Deutsche Bank and Commerzbank is “finally off the table” with Cerberus’ partial exit. The financial investor had always campaigned for mergers and in 2019 also supported the start of the merger between Deutsche Bank and Commerzbank. In the end, however, the merger did not materialize.

Financial investor makes a loss of around 150 million euros

Cerberus bought around 62 million shares in each of the two most important German financial institutions in 2017. At the start, Deutsche Bank’s paper cost around 15 euros and Commerzbank’s around eleven euros – around three euros more than today.

On Monday, Morgan Stanley placed Deutsche Bank shares for EUR 12.06 per share and Commerzbank shares for EUR 7.50. The financial investor took in 443 million euros. Compared to the entry-level price, that means a loss of around 150 million euros.

Experts think further sales of Cerberus are likely. According to Morgan Stanley, the financial investor has only set a deadline of 45 days during which he does not want to throw any further blocks of shares from either bank on the market. Holding periods of at least three months are normal.

More: Deutsche Bank is “very confident” about its target return – investors are doubtful

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