Commerzbank to raise $1.5 billion via share sale

Commerzbank on Monday launched a share sale to raise 1.4 billion euros ($1.5 billion) from institutional investors to help to bolster its capital strength.

The sale of new shares follows Commerzbank's agreement in March to pay $1.45 billion to settle an investigation into whether it breached U.S. sanctions against countries such as Iran and Sudan.


German Commerzbank is pictured in front of their headquarters in Frankfurt, central Germany.
Mario Vedder
German Commerzbank is pictured in front of their headquarters in Frankfurt, central Germany.

Germany's second-largest bank said it would seek to place the new shares with institutional investors, a move designed to raise its common equity Tier one ratio to more than 10 percent and its leverage ratio to 3.9 percent. These ratios help to gauge a bank's financial strength.

"With the successful conclusion of the capital measure announced today the bank expects a further increase in the Common Equity Tier 1 ratio to ... more than 10 percent," the bank said in a statement.

The bank also reported an 83 percent jump in first-quarter net profit to 366 million euros.

After Commerzbank's $1.45 billion settlement, analysts had said the market would focus on whether the bank would need to strengthen its capital position.

Two people familiar with the share sale transaction told Reuters that the capital increase was not connected to plans by rival Deutsche Bank to sell its retail chain Postbank.

"Postbank is not an issue. The only reason for the cap hike was to strengthen capital ratios," one of the sources said.

Another person familiar with the matter said the bank aimed to sell the shares as close as possible to Monday's closing share price, which was 12.91 euros.