European banks are in urgent need of additional capital to meet new regulations imposed by the EU, and some may have problems finding the amounts in billions of euros. In this hostile environment, the German publication Der Spiegel wrote that the survival of Commerzbank, the second largest bank in Germany, is questioned, and Berlin is taking into consideration the hypothesis of a total nationalization of the bank in case of need. If Martin Blessing, chief executive of the bank, could make a wish, it would most probably be to get several billion euros, or someone to take the troubled subsidiary Eurohypo or bank exposure to sovereign debt to just disappear.
But banks, along with managers and owners can not rely on miracles. They need money quickly. And while the survival of the Commerzbank is put into question again, its shareholder based in Berlin – the government – considers an extreme option: given that 25% of the shares are already state-controlled bank, the bank could be fully nationalized. According to government sources, if Commerzbank is not able to gather enough money on their own until summer, Berlin will re-activate Soffin, the special fund to stabilize the financial sector, and will buy shares of the bank. Sources say that the government will buy a majority stake.
However, things have not yet reached that level and don’t have to go there, writes German newspaper. The bank’s management is trying to do without government’s help. It is a thorny problem to be solved by new financial director Stephan Engels, who was appointed recently.
If Commerzbank fails to raise the money, the days of Blessing in the bank’s management could come to an end. “I will not again call on this version”, he said referring to government support of 16.2 billion euros received by the bank in 2009.
