Bloomberg News

Komercni Banka Drops as Early Loan Repayment Lowers Capital

December 12, 2011

(Updates with closing share price in second paragraph.)

Dec. 12 (Bloomberg) -- Komercni Banka AS fell on concern that early repayment of a loan provided by Societe Generale SA, its majority owner, will cut the Czech lender’s capital buffers.

The stock dropped 2.4 percent to 3,144 koruna by its 4:24 p.m. close in Prague, adding to a 1.8 percent retreat last week. Komercni was the third-worst performer today in the country’s PX equity index, which retreated 1.5 percent.

The board of directors approved early repayment of a 10- year loan of 6 billion koruna ($314 million) obtained in 2006, Prague-based Komercni Banka said in a statement on Dec. 9 after the stock market closed. The capital adequacy ratio was 16 percent in September 2011, of which the loan’s contribution was 1.7 percent, the Czech lender said.

“The market may perceive any news about declining capital as negative,” analysts led by Milan Vanicek at J&T Banka AS in Prague wrote in an e-mail to clients today. “We consider the news neutral because the management announced it may repay the loan during a conference call after third-quarter earnings.”

--Editors: Alan Purkiss, Peter Branton

To contact the reporter on this story: Krystof Chamonikolas in Prague at kchamonikola@bloomberg.net

To contact the editor responsible for this story: Gavin Serkin at gserkin@bloomberg.net


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