Jan. 8 (Bloomberg) -- Commerzbank AG will get a second state bailout and sell a stake to the German government to shore up its balance sheet as the company prepares to acquire Dresdner Bank from Allianz SE.

Commerzbank will get 10 billion euros ($13.7 billion) of capital, the Frankfurt-based company said in a statement today. In return, the government will take a stake of 25 percent plus one share in the combined Commerzbank-Dresdner. The funds will increase the new company’s so-called core capital ratio, a key measure of solvency, to about 10 percent, Commerzbank said.

“The sheer size of the additional capital required is much higher than expected,” said Konrad Becker, a Munich-based analyst at Merck Finck & Co., who has a “hold” rating on Commerzbank and Allianz. “This can only be explained by Commerzbank seeking to start with a clean slate before acquiring Dresdner.”

Dresdner was seeking additional funds after fourth-quarter investment writedowns, two people with knowledge of the situation said yesterday. Banks from UBS AG in Zurich to New York-based Citigroup Inc. were forced into state rescues after the September bankruptcy of Lehman Brothers Holdings Inc. froze credit markets.

Commerzbank fell 84 cents, or 14 percent, to 5.25 euros in Frankfurt electronic trading. The stock has dropped 21 percent this year, valuing the bank at about 3.8 billion euros. Munich- based Allianz fell 5.4 percent to 66.67 euros.

Commerzbank Chief Executive Officer Martin Blessing, who took the helm of Germany’s second-largest bank in May, tapped the state for 8.2 billion euros last November. In the latest step, Germany’s bank-rescue fund, called Soffin, will buy 1.8 billion euros of Commerzbank shares and lend the rest of the money.

Capital Ratio

In a separate agreement, Allianz will boost Dresdner’s capital by a further 1.45 billion euros by taking over some of the bank’s risky assets. For Allianz, the sale of Dresdner unwinds the 23.5 billion-euro purchase announced in 2001, which has dragged on the company’s profit and stock.

Allianz will hold a 14 percent stake in Commerzbank after the Dresdner deal is completed, down from 18.4 percent under the previous plan, spokeswoman Petra Kruell said today. Allianz also will lend Dresdner 750 million euros.

The German government pushed a 500 billion-euro bank rescue plan through parliament on Oct. 17, offering lenders capital infusions and debt guarantees. Commerzbank became Germany’s first publicly traded bank to get cash from the rescue fund.

Not ‘Partial Nationalization’

Bayerische Landesbank, IKB Deutsche Industriebank AG and HSH Nordbank AG have been granted aid in the form of debt guarantees. Hypo Real Estate Holding AG, the Munich-based property lender, received a 50 billion-euro government bailout in October.

“Against the background of the intensified financial crisis, the new bank will thus be enabled to meet the substantially higher capital requirements for banks,” Commerzbank said in the statement.

Deutsche Bank AG, the country’s largest bank, has said it doesn’t plan to accept government funds.

The Berlin-based Finance Ministry, which will control the federal stake in Commerzbank, said today in an e-mailed statement that boosting the lender’s core capital ratio with taxpayers’ money sent a “strong signal that the Commerzbank is strong.”

The ministry denied that the action equaled a “partial nationalization” of the lender. The government’s stake will improve Commerzbank’s competitiveness, the ministry said.

Commerzbank announced plans in November to accelerate its takeover of Dresdner by as much as a year to complete the 5.1 billion-euro deal this month. The takeover’s terms were revised after Commerzbank lost more than half of its market value since Aug. 31, when it agreed to buy Dresdner in a cash and share purchase then valued at 9.8 billion euros.

To contact the reporters on this story: Jann Bettinga in Frankfurt at jbettinga@bloomberg.net; Oliver Suess in Munich at osuess@bloomberg.net;

Last Updated: January 8, 2009 15:33 EST