Commerzbank AG (CBK), which was assigned the largest capital gap of six German lenders by Europe’s top banking regulator, said it can raise about 2.9 billion euros ($3.9 billion) in the first half, outstripping its target.
The bank will reap cost savings and seek to pay bonuses to a “large proportion” of eligible employees with stock in the company, Frankfurt-based Commerzbank said today in a statement on its website. The lender reduced its capital requirement by more than 80 percent to about 1 billion euros after swapping capital instruments trading below their face value with investors at the beginning of March, the bank said.
Europe’s leaders sought to restore confidence in the banking industry’s ability to withstand the region’s sovereign debt crisis by ordering lenders to boost capital. The European Banking Authority told Commerzbank, Germany’s second-largest bank, to close a 5.3 billion-euro gap.
The 2.9 billion-euro target is based on “current business planning” and assumes “that the economic fundamentals, and in particular the debt crisis, do not deteriorate further,” Martin Blessing, Commerzbank’s chief executive officer, said in a letter to shareholders in his annual report.
In December, the EBA told European banks to raise 114.7 billion euros in fresh capital by the end of June. The regulator called for lenders to have core Tier 1 capital, a measure of financial strength, of at least 9 percent of risk-weighted assets after accounting for writedowns on some European sovereign bonds.
Commerzbank expects to have a capital ratio of more than 11 percent after implementing the measures and comply with EBA and Basel III requirements, Blessing said. The bank has additional options to boost capital if necessary, he said.
The lender expects earnings next year to be an “improvement” on 2012, a year in which the debt crisis will continue to cloud its forecast, according to the statement.
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