Cerberus Considers Buying Commerzbank Stake

Updated on
  • Buyout firm may build minority stake with market purchases
  • Deal may help Cerberus capitalize on rallying industry outlook

The Commerzbank AG logo sits illuminated on the bank's headquarter offices at dusk in the financial district in Frankfurt.

Photographer: Krisztian Bocsi/Bloomberg

Cerberus Capital Management is weighing a plan to purchase a stake in Commerzbank AG as the U.S. buyout firm seeks to add investments in European lenders, according to people familiar with the matter.

Cerberus is considering building a minority stake by buying shares in the German bank on the market, the people said, asking not to be identified because the discussions are private. The private equity firm hasn’t made a final decision on the size of the holding, and may still decide to pursue a different strategy to capitalize on the industry’s improving outlook, said the people.

“This is a sign of trust in Commerzbank’s management,” said Michael Seufert, an analyst with NordLB who has a sell recommendation on the stock. “But Cerberus’s timing is questionable given that many in the market have already made their bet on rising interest rates.”

Representatives for Cerberus and Commerzbank declined to comment.

Commerzbank’s shares rose on the news, gaining 2.4 percent at 9:12 a.m. in Frankfurt. The lender, bailed out in 2009, is leading a rally in European bank stocks this year as Chief Executive Officer Martin Zielke cuts thousands of jobs and streamlines operations to boost profitability and market share in German retail banking.

Cerberus already controls Austrian lender Bawag PSK Bank, which said in May that it’s in talks to acquire Suedwestbank AG, a small commercial lender in Germany’s prosperous southwest. Bawag said at the time it plans to use that base to expand in the country.

Commerzbank, Germany’s second-biggest publicly traded bank after Deutsche Bank AG, with a market value of about 13.6 billion euros ($15.4 billion), is a much bigger player. Its stock has risen 53 percent this year, the best in the Bloomberg Europe 500 Banks and Financial Services Index, but it still only trades at about half of its book value, compared with an average of 1.2 times for the banks tracked by the index.

The German government still owns more than 15 percent of Commerzbank, according to the latest information on the bank’s website. Commerzbank handed over a 25 percent stake to the government in 2009 in return for an 18.2 billion-euro bailout.

Cerberus also has been among potential buyers for HSH Nordbank, people familiar with the matter said in May. The Hamburg-based lender’s majority owners, two German federal states, have been ordered by the European Union to privatize the bank by the end of February next year.

— With assistance by Steven Arons, and Melissa Mittelman

(Updates with analyst comment in third paragraph, share reaction in fifth.)
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