Bloomberg News

Commerzbank Wins European Union Approval to Change Bailout Terms

March 30, 2012

Commerzbank AG (CBK), a German lender rescued by taxpayers, won European Union approval for its bailout by agreeing to wind down a unit and extending a ban on acquisitions until March 2014.

Commerzbank sought EU approval to change the terms of its 2009 bailout which required it to sell its Eurohypo real-estate unit by 2014. The bank has said a sale of the public-finance and commercial-property lender would be difficult because of concerns over the division’s ability to fund itself.

Germany’s second-largest lender will put Eurohypo’s sovereign debt and parts of its commercial real estate assets into a bad bank that will wind them down, the European Commission said. Commerzbank can keep a small part of its own and Eurohypo’s commercial property businesses in Germany, France, Poland and the U.K. It must reduce these assets to 25 billion euros ($33 billion) by the end of 2013.

“The winding down of Eurohypo on the balance sheet of Commerzbank plus a prolongation of the acquisition ban are an adequate substitute to the divestiture of Eurohypo,” said EU Competition Commissioner Joaquin Almunia in an e-mailed statement.

EU regulators have required banks to sell assets to compensate for the harm to competition caused by large amounts of aid pumped into the industry following the collapse of Lehman Brothers Holdings Inc.

To contact the reporter on this story: Aoife White in Brussels at awhite62@bloomberg.net.

To contact the editor responsible for this story: Anthony Aarons at aaarons@bloomberg.net.


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