Nov. 3 (Bloomberg) -- Commerzbank AG tapped the German government for 8.2 billion euros ($10.6 billion) and France's Societe Generale SA reported an 84 percent plunge in profit as the financial crisis batters European banks.

Commerzbank, Germany's second-biggest bank, rose 5 percent in Frankfurt trading after turning to the state's 500 billion- euro rescue package for financial institutions to boost capital. Societe Generale said third-quarter profit dropped to 183 million euros on credit-related writedowns.

Banks from UBS AG in Zurich to New York-based Citigroup Inc. were forced into government rescues after the September bankruptcy of Lehman Brothers Holdings Inc. froze credit markets. Commerzbank, the first publicly traded German bank to get a capital injection under the state plan, said the funds won't dilute shareholders.

``The crisis is penetrating the whole macro-economy,'' said Konrad Becker, an analyst at Merck Finck & Co. in Munich, who has a ``hold'' rating on Commerzbank shares. Still, ``there is reason to hope that the acute liquidity crisis will abate in the foreseeable future thanks to the government help.''

Commerzbank climbed 42 cents to 8.85 euros, valuing the company at 6.4 billion euros. The stock has declined 66 percent this year, compared with a 54 percent drop in the 69-member Bloomberg Europe Banks and Financial Services Index. Societe Generale, the third-largest French bank by assets, rose 0.4 percent in Paris. The stock is down 54 percent this year.

Quarterly Loss

Commerzbank sought the government funds as it reported a third-quarter loss of 285 million euros, compared with a 339 million-euro profit a year earlier. Earnings were hurt by about 1.1 billion euros of writedowns and credit losses, including 371 million euros tied to Lehman's collapse and 260 million euros related to the banking crisis in Iceland.

As part of today's deal, Commerzbank won't pay dividends for this year and 2009, and management board members will forgo bonuses payments for the same period. Chief Executive Officer Martin Blessing's compensation will be capped at 500,000 euros.

The Frankfurt-based lender, which agreed in August to buy Dresdner Bank from Allianz SE, will also obtain debt guarantees of about 15 billion euros. Commerzbank doesn't currently need to use them as it's fully funded into next year, Blessing, 45, said on a conference call.

``The positive aspect is that Commerzbank found a way to raise capital without having to re-negotiate the Dresdner acquisition from Allianz,'' said Merck Finck's Becker.

Commerzbank said it's committed to the Dresdner takeover.

Rescue Plan

The government won't receive an equity holding or get a seat on the supervisory board as a result of the aid. The state money will be provided in two steps of 4.1 billion euros each, with an interest rate of 8.5 percent on the first installment and 5.5 percent on the second. The funds will cost Commerzbank 400 million euros to 500 million euros annually, it said.

The fresh capital will boost Commerzbank's Tier 1 ratio, a key measure of solvency, to 11.2 percent. The bank set a ``medium-term'' target of 7 percent to 9 percent for the ratio.

The government rescue plan includes 400 billion euros in debt guarantees and provides as much as 80 billion euros in capital. Munich-based Hypo Real Estate Holding AG already tapped the plan for guarantees.

Frankfurt-based Dresdner reiterated today that it's looking at the government rescue package and said its Tier 1 ratio was at a ``competitive'' level at the end of September. The measurement stood at 9.3 percent in the second quarter.

Not `Artificially Enhanced'

Josef Ackermann, CEO of Deutsche Bank AG, Germany's biggest bank, has said the company doesn't need the rescue fund. Deutsche Bank reported a surprise third-quarter profit last week after new accounting rules allowed it to book fewer asset writedowns.

Societe Generale eschewed the new rules when reporting earnings today. ``We've decided to be prudent,'' said CEO Frederic Oudea, 45, in an interview with Bloomberg Television. ``This profit isn't artificially enhanced by anticipated changes in accounting rules.''

Societe Generale shares touched a 10-year low on Oct. 29 on speculation the company might post losses on derivative positions, as well as suffer from market turmoil in Russia and Eastern Europe, which account for about a fifth of profit.

Paris-based Societe Generale is getting 1.7 billion euros from the French state as part of that government's plan to recapitalize lenders.

`No Major Accident'

``The market is relieved to see that there was no major accident,'' said Francois Chaulet, who helps manage 150 million euros at Montsegur Finance in Paris, including Societe Generale shares. ``That was the quarter where all the dangers lay for trading rooms, for derivatives and options.''

Societe Generale recorded markdowns of about 1.4 billion euros in the quarter, including 447 million euros related to the bankruptcy of Lehman Brothers and 453 million euros tied to U.S. bond insurers.

The corporate and investment bank had a net loss of 244 million euros in the third quarter, while Societe Generale Asset Management had a loss of 6 million euros. Profit declined 5 percent at the French consumer-banking unit and rose 48 percent at the international retail operations.

Societe Generale had total markdowns of 6.36 billion euros since the start of 2007, while revaluations on the bank's own debt and credit-default swaps resulted in total gains of about 1.5 billion euros, according to figures from the company.

To contact the reporter on this story: Jann Bettinga in Frankfurt at jbettinga@bloomberg.net. Fabio Benedetti-Valentini in Paris at fabiobv@bloomberg.net.

Last Updated: November 3, 2008 12:26 EST