House Passes Budget to Ease $63 Billion in U.S. Spending Cuts
Commerzbank Slumps on Sovereign Debt Concern: Frankfurt Mover
Commerzbank AG (CBK), the German bank forced to raise capital five times in the past four years, fell the most since March on concern that exposure to southern European debt may add to its financial woes.
Commerzbank dropped as much as 6.9 percent to 5.73 euros in Frankfurt, the lowest intraday price on record and taking losses this year to 46 percent. The 47-member Stoxx 600 Banks Index fell 3 percent.
“There seems to be renewed concern about holdings of peripheral bonds in Italy, Spain and Portugal given the public finance exposure the bank has,” Riccardo Rovere, an analyst at Mediobanca SpA (MB), said by telephone from Milan.
Commerzbank’s declines were surpassed only by lenders in Portugal and Spain in a sell-off sparked by the second resignation of a Portuguese government minister in two days, which sent the country’s 10-year bond yield to 8 percent for the first time since November.
Commerzbank had 2.9 billion euros ($3.8 billion) of exposure to debt in Portugal and 12.2 billion euros to Spain at the end of March, company filings show. Those figures combine sovereign, banking, commercial real estate and other debt.
The bank last raised capital in May, offering existing shareholders 2.5 billion euros of new shares to repay debt to the government and insurer Allianz SE. (ALV)
“There’s nothing attractive about the Commerzbank story,” Dirk Becker, an analyst at Kepler Capital Markets in Frankfurt, said by telephone. “The capital increase, poor first-quarter earnings. The second quarter is likely to be no better, and the outlook for the rest of the year and 2014 is poor. There’s no reason to buy this stock at the moment.”
Banks in Europe also fell after Standard & Poor’s downgraded Deutsche Bank AG, Barclays Plc (BARC) and Credit Suisse Group AG. (CSGN) New banking regulations and “uncertain market conditions” threatened their business, S&P said yesterday.
Costs of firing staff contributed to a loss of 94 million euros at Commerzbank in the first three months of the year. Profit for 2012 was almost wiped out by charges on the sale of its Ukrainian unit and taxes.
“Every year without a profit delays their efforts to build capital,” Guido Hoymann, an analyst with Bankhaus Metzler who recommends selling the shares, said by telephone.
Chief Executive Officer Martin Blessing, who handed the government a 25 percent stake in 2009 as part of an 18.2 billion-euro state bailout, says he’s turning the firm around by eliminating staff and winding down shipping and real estate assets.
Karsten Swoboda, a spokesman for Commerzbank, declined to comment on the recent decline in the share price.
To contact the editor responsible for this story: Frank Connelly at email@example.com