Commerzbank AG, Germany’s second-biggest bank, slid in Frankfurt trading after newspaper Handelsblatt said the company will sell shares in a 2.5 billion-euro ($3.25 billion) capital increase this week.
The stock fell 4.7 percent to 9.94 euros at the close of trading, the biggest decline in two months. That extended losses this year to 31 percent, the most among 40 firms on the Bloomberg Europe Banks and Financial Services Index.
Commerzbank will sell the shares in the rights offering tomorrow or May 15 and grant a discount of about 35 percent, Handelsblatt reported yesterday, citing people in the finance industry that it didn’t identify. Karsten Swoboda, a spokesman for the Frankfurt-based bank, declined to comment. Commerzbank originally announced the plan in March.
“There is pressure on the stock,” Ingo Frommen, an analyst with Landesbank Baden-Wuerttemberg who has a hold recommendation on the shares, said by telephone from Stuttgart, Germany. “Some investors probably won’t boost their holdings and we may not see the low point for the stock until the middle of the subscription period.”
Commerzbank, wracked by financial troubles including failed shipping businesses, is carrying out its fifth capital increase in four years. Its shares have declined 94 percent since September 2008, the most among financial companies in Europe outside Ireland and Greece. The company got an 18.2 billion-euro government bailout in 2009 and is also eliminating staff and winding down unprofitable assets.
The bank said last month that it will offer the stock by the start of June after reducing the number of shares to 583 million from 5.83 billion in a reverse share split.
Commerzbank wants to sell the shares this week to take advantage of record highs on stock markets, Handelsblatt reported.
Angry shareholders criticized Chief Executive Officer Martin Blessing at an annual general meeting last month, saying wrong decisions by the bank meant their investments had all but evaporated. Several called on the management to resign.
Blessing’s predecessor Klaus-Peter Mueller, who made investments in property and shipping that later turned sour, is chairman of the bank’s supervisory board, responsible for overseeing operations and appointing executive board members.