Brussels, 07/05/2009 (Agence Europe) - On Thursday 7 May, the European Commission approved the partial nationalisation of Germany's second largest private bank, the Commerzbank, but only on condition that it makes some large-scale divestments. Berlin intends to take 25% of the bank's capital in exchange for an injection of €10 billion, coming on top of €8 billion awarded at the end of 2008.
Commerzbank will focus on its core businesses - retail and corporate banking - and will give up its investment banking and commercial real estate activities, which amount to roughly 45% of it current balance sheet total, the Commission says. Among the subsidiaries to be sold off are the real estate company Eurohypo, which has caused Commerzbank considerable losses. In addition, Commerzbank “will be subject to a general ban for three years on acquisitions of financial institutions or other businesses which potentially compete with it”. The Commission has also succeeded in getting an undertaking that no dividends or interest will be paid to holders of hybrid capital and commitments on prices at which the bank will propose its services. The Commission has also opened an in-depth investigation into the €35 billion state guarantee to another German bank, Hypo Real Estate. (L.C./transl.rt)