Commerzbank AG, Germany’s second-biggest bank, slumped to a record low as it carried out a reverse share split, part of a 2.5 billion-euro ($3.2 billion) capital increase plan.
The stock slid as much as 4.2 percent in Frankfurt trading and dropped 2.5 percent to 1.063 euros at 12:23 a.m., valuing the company at 6.2 billion euros.
Commerzbank reduced the number of shares to 583 million from 5.83 billion in the reverse share split. The converted share certificates will begin trading tomorrow, Commerzbank said in a statement.
“The shares are caught in a downward spiral as there will be no way around the capital increase,” Christian Hamann an analyst with Hamburger Sparkasse who recommends selling Commerzbank, said by telephone. “The dilution of the shares will get worse and worse with the falling share price.”
Commerzbank, which is eliminating staff and shutting down loss-making shipping and real estate units, got shareholder approval for the capital raising plan last week to repay a remaining 1.6 billion euros in state aid. The bank, which reported a loss of 716 million euros in the fourth quarter, hasn’t paid a dividend since the financial crisis erupted in 2008. Its shares have slumped 93 percent since.
“The capital reduction has no impact on the assets of the shareholders or their individual stakes in the capital stock of Commerzbank,” the bank said today. “It merely represents a simple balance sheet measure.”
Deutsche Bank AG, Citigroup Inc. and HSBC Holdings Plc agreed to underwrite the capital increase. They will buy shares at a minimum of 1.1 euros apiece in the capital increase should Commerzbank fail to sell the whole amount planned, the company said last month.
The capital increase, which includes the trading of subscription rights, will be completed between mid-May and the start of June, Commerzbank said.