Commerzbank Slides on Asset Quality Concern
Commerzbank dropped as much as 6.7 percent in Frankfurt trading, the biggest intraday slump since July 3. The stock was down 5.7 percent at 8.81 euros by 1:47 p.m., extending its decline this year to 18 percent and valuing the company at 10 billion euros ($13.5 billion).
The company is winding down and selling 136 billion euros of assets to meet requirements for state aid granted in 2009 and boost capital. Losses from shipping and commercial real estate loans in that portfolio have eroded profit from corporate and consumer banking divisions this year.
Martin Blessing, the chief executive officer, briefed analysts in London yesterday at a meeting that was “underwhelming in terms of sentiment,” Jaime Becerril, a JPMorgan Chase & Co. (JPM) analyst with a neutral recommendation on the stock, wrote in a note to clients today.
Commerzbank plans to cut the size of the portfolio to “substantially below” 90 billion euros by the end of 2016, company filings show.
The bank said its shipping loans are developing “as expected,” which is “unfortunately not enough, in our view,” Becerril wrote. “Management reported how its commercial real estate portfolio is proving a bit less problematic than previously expected, but more transactions are needed.”
Barclays Plc analysts who attended the briefing cited the prospect of a lack of asset disposals at the end of this year as negative. The analysts, who have an underweight recommendation on the shares, commented in an e-mailed note to clients.
Some investors are concerned the European Central Bank may identify a capital shortfall at Commerzbank after a planned review of asset quality at European banks, Philipp Haessler, an analyst with Equinet Bank AG, said by phone.
“Commerzbank has a few assets that are poorer than those of its peers,” said Frankfurt-based Haessler, who cut his rating on the shares to hold from buy yesterday “because the stock had almost reached our price target of 10 euros after a great run over the last few months.”
Commerzbank is “well positioned” for the ECB’s review after similar audits of its assets, Stephan Engels, the company’s chief financial officer, told analysts on a conference call last month. “I do not see any specific risk there.”
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