The German government is preparing to reduce its stake in Commerzbank. This move marks the beginning of the state’s exit strategy from its involvement in the bank.
Government’s stake reduction plan
The German Finance Agency has announced plans to reduce the federal government’s stake in Commerzbank. Florian Toncar, Parliamentary State Secretary at the Federal Ministry of Finance and chairman of the responsible inter-ministerial steering committee, explained, “The federal government’s entry into Commerzbank in 2008 and 2009 was important to protect financial market stability amid the banking crisis.” He added that Commerzbank has now regained stability and profitability, making it appropriate for the government to gradually divest its shares in the successfully stabilized institution.
Eva Grunwald, Managing Director of the Finance Agency, noted that the bank’s economic situation has steadily improved since 2021. Consequently, the government is responding by reducing its stake in Commerzbank and initiating its exit. The sale of the relevant share package is planned to be conducted transparently and with minimal market disruption. The inter-ministerial steering committee will decide on further sales steps in due course.
Background of government involvement
Commerzbank found itself in financial difficulties during the 2008 financial market crisis. To maintain financial market stability, the bank received capital assistance totaling 18.2 billion euros from the Financial Market Stabilization Fund (FMS) in 2008 and 2009. To date, approximately 13.15 billion euros have been repaid.
Currently, the federal government, through the FMS, still holds a 16.49% stake in Commerzbank. This planned reduction in ownership marks a significant step in the government’s strategy to fully exit its position in the bank, reflecting the improved financial health of Commerzbank and the stabilization of the financial market since the 2008 crisis.
