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Commmerzbank Sells $960 Million of Spanish Loans

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A logo sits on the Commerzbank AG Headquarters in Frankfurt
A logo sits illuminated on the Commerzbank AG headquarters in Frankfurt. Photographer: Krisztian Bocsi/Bloomberg

Feb. 6 (Bloomberg) -- Commerzbank AG, Germany’s second-largest bank, said it sold 710 million euros ($960 million) of non-performing commercial real estate loans in Spain as it shrinks bad debt to raise capital levels.

The sale to a group of international investors will reduce the Frankfurt-based company’s risk-weighted assets by 600 million euros and release about 20 million euros of capital, Commerzbank said in an e-mailed statement today. The company agreed not to identify the investors.

Commerzbank is selling and winding down soured shipping and commercial real estate loans as regulators call on lenders to raise capital as a share of assets. Spain, where a decade-long property bubble burst in 2008, accounted for the largest share of the firm’s riskiest real estate loans at the end of September.

The shares rose as much as 3.1 percent, the biggest intraday gain in more than a week. The stock was up 2.9 percent at 12.96 euros as of 10:51 a.m. in Frankfurt, extending this year’s gain to more than 10 percent.

Commerzbank said the sale has helped reduce its Spanish non-performing real estate loans by about 1 billion euros from 2 billion euros at the beginning of last year.

A “minor burden” from the sale will be reflected in its fourth-quarter earnings, the company said.

To contact the reporters on this story: Nicholas Comfort in Frankfurt at ncomfort1@bloomberg.net; Shane Strowmatt in Frankfurt at sstrowmatt@bloomberg.net

To contact the editor responsible for this story: Frank Connelly at fconnelly@bloomberg.net

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