Bloomberg News

Commerzbank Drops as Analysts Question Pace of Assets Disposals

September 25, 2013

Commerzbank AG (CBK), Germany’s second-biggest bank, fell the most in almost three months in Frankfurt trading as analysts voiced concern the company is moving too slowly to dispose of risky assets.

Commerzbank dropped as much as 6.7 percent in Frankfurt trading, the biggest intraday slump since July 3. The stock was down 5.7 percent at 8.81 euros by 1:47 p.m., extending its decline this year to 18 percent and valuing the company at 10 billion euros ($13.5 billion).

The company is winding down and selling 136 billion euros of assets to meet requirements for state aid granted in 2009 and boost capital. Losses from shipping and commercial real estate loans in that portfolio have eroded profit from corporate and consumer banking divisions this year.

Martin Blessing, the chief executive officer, briefed analysts in London yesterday at a meeting that was “underwhelming in terms of sentiment,” Jaime Becerril, a JPMorgan Chase & Co. (JPM:US) analyst with a neutral recommendation on the stock, wrote in a note to clients today.

Commerzbank plans to cut the size of the portfolio to “substantially below” 90 billion euros by the end of 2016, company filings show.

‘Not Enough’

The bank said its shipping loans are developing “as expected,” which is “unfortunately not enough, in our view,” Becerril wrote. “Management reported how its commercial real estate portfolio is proving a bit less problematic than previously expected, but more transactions are needed.”

Barclays Plc analysts who attended the briefing cited the prospect of a lack of asset disposals at the end of this year as negative. The analysts, who have an underweight recommendation on the shares, commented in an e-mailed note to clients.

Blessing is scheduled to speak today at a conference hosted by Bank of America (BAC:US) Corp. in London.

Some investors are concerned the European Central Bank may identify a capital shortfall at Commerzbank after a planned review of asset quality at European banks, Philipp Haessler, an analyst with Equinet Bank AG, said by phone.

“Commerzbank has a few assets that are poorer than those of its peers,” said Frankfurt-based Haessler, who cut his rating on the shares to hold from buy yesterday “because the stock had almost reached our price target of 10 euros after a great run over the last few months.”

Commerzbank is “well positioned” for the ECB’s review after similar audits of its assets, Stephan Engels, the company’s chief financial officer, told analysts on a conference call last month. “I do not see any specific risk there.”

To contact the reporter on this story: Nicholas Comfort in Frankfurt at ncomfort1@bloomberg.net

To contact the editor responsible for this story: Frank Connelly at fconnelly@bloomberg.net


Toyota's Hydrogen Man
LIMITED-TIME OFFER SUBSCRIBE NOW

Companies Mentioned

  • JPM
    (JPMorgan Chase & Co)
    • $61.93 USD
    • 0.45
    • 0.73%
  • BAC
    (Bank of America Corp)
    • $17.62 USD
    • 0.09
    • 0.51%
Market data is delayed at least 15 minutes.
 
blog comments powered by Disqus