CBK.DE - Commerzbank AG
| Previous close | 3.7370 |
| Open | 3.8500 |
| Bid | 3.7610 x 200000 |
| Ask | 3.7640 x 110000 |
| Day's range | 3.6960 - 3.8850 |
| 52-week range | 2.8040 - 6.8320 |
| Volume | 15,294,714 |
| Avg. volume | 17,500,111 |
| Market cap | 4.713B |
| Beta (5Y monthly) | 1.84 |
| PE ratio (TTM) | 20.79 |
| EPS (TTM) | 0.1810 |
| Earnings date | 05 Aug 2020 |
| Forward dividend & yield | N/A (N/A) |
| Ex-dividend date | 07 May 2020 |
| 1y target est | 11.78 |
- Reuters
Commerzbank to raise up to 3 billion euros of capital
Commerzbank <CBKG.DE> on Tuesday laid out plans that will allow the German bank to raise up to 3 billion euros (2.7 billion pounds) in capital. Commerzbank, the country's second biggest lender, said it would issue the securities, known additional tier 1 (AT1) bonds, gradually and make a decision on the timing of the first round at a later date. Bettina Orlopp, Commerzbank's finance chief, said the securities would allow the bank to "respond to the additional business opportunities that have arisen for us in the context of the coronavirus crisis."
- Simply Wall St.
Here's What We Think About Commerzbank AG's (ETR:CBK) CEO Pay
Martin Zielke has been the CEO of Commerzbank AG (ETR:CBK) since 2016. This report will, first, examine the CEO...
- Reuters - UK Focus
LIVE MARKETS-Opening snapshot: Risk-off mood hits banks, Vodafone up
You can share your thoughts Joice Alves (joice.alves@thomsonreuters.com) and Julien Ponthus (julien.ponthus@thomsonreuters.com) in London and Stefano Rebaudo (stefano.rebaudo@thomsonreuters.com) in Milan. Risk-off mood gripped the financial markets on fresh fears about a second wave of the coronavirus outbreak, while the gradual easing in lockdowns is under way. While utilities, retail and telcos are standing their ground even if in negative territory.
- Bloomberg
Commerzbank Takes $520 Million Virus Hit as Provisions Jump
(Bloomberg) -- Commerzbank AG took a 479 million-euro ($520 million) hit to deal with the fallout from the coronavirus crisis, joining peers in marking down assets and boosting reserves to deal with bad loans.The Frankfurt-based bank said on Wednesday that 185 million euros of its 326 million euros in credit provisions were directly related to the outbreak, while the crisis also caused a hit of 295 million euros in the value of customer derivatives. Commerzbank said credit provisions could reach 1.4 billion euros this year, making its goal of posting a profit “very ambitious.”The outbreak has added urgency to a four-year turnaround effort by Chief Executive Officer Martin Zielke that has failed to restore robust profitability. While he cut soured loans, a pivot toward retail and corporate lending in Commerzbank’s home market is leaving it exposed to negative interest rates and business disruptions. Zielke is now working on his third round of cost cuts and hired McKinsey & Co. to review his business model, Bloomberg has reported.“We’re looking into our costs again and we definitely want to increase our profitability target,” Chief Financial Officer Bettina Orlopp said in an interview on Bloomberg TV. “Indeed, corona has added some new lights on it and we will incorporate that and we will update you in the summer.”Bloomberg reported Tuesday that Commerzbank is considering deeper cuts to its vast branch network as the crisis forces more clients online, allowing Zielke to reverse course on a pledge that he would keep most branches. The CEO has come under pressure from his largest shareholders after his previous targets were widely seen as unambitious.“Customer behavior, especially the German one, is really changing,” Orlopp said. “We’re thoroughly analyzing the situation and also the impact on our business model and we will adapt to it.”Commerzbank Confronts Tough Choice as Virus Forces Zielke’s HandRisk provisions for the full year could rise to between 1 billion euros and 1.4 billion euros, the bank said. Orlopp said that prediction was based on the assumption of a u-shaped economic recovery, with no second lockdown.All European banks have reported higher credit provisions this earnings season though the increases have generally been much lower than the ones by peers in the U.S. European regulators have given lenders the leeway to take a longer-term view when forecasting how much of their loans may go bad, allowing the firms to consider the eventual recovery from the pandemic-induced slump.ABN AmroIn the neighboring Netherlands, ABN Amro Bank NV also on Wednesday reported credit provisions of 1.1 billion euros and said the figure could rise to 2.5 billion euros for the full year. Like Commerzbank, ABN Amro is still part-owned by its government after a bailout in the wake of the 2008 financial crisis, underscoring just how slow European lenders have been to rebound.Commerzbank fell 2.8% at 9:04 a.m. in Frankfurt, bringing losses this year to 43%. ABN Amro slumped 4.4% in Amsterdam and is down 61% so far in 2020.Commerzbank on Monday scrapped its plan to sell its Polish subsidiary mBank SA after it was unable to get a good price for it. Zielke had planned to sell the unit to fund a restructuring of Commerzbank’s domestic operations. He later said a better-than-expected capital cushion had reduced the rationale for the deal.Commerzbank lowered the full-year target for its common equity Tier 1 ratio -- a key measure of capital strength -- to at least 12.5%, citing lower regulatory requirements. The metric stood at 13.2% at the end of the first quarter.More details from Commerzbank’s first-quarter earnings:1Q revenue EU1.85 billion, estimate EU1.97 billion1Q loss EU295 million, estimate loss EU217.9 million1Q operating loss EU277 million, estimate loss EU169.5 million1Q pretax loss EU233 million, estimate loss EU157.7 million1Q common equity Tier 1 ratio 13.2% vs. 12.7% y/y(Adds CFO interview starting in fourth paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
- Reuters
Commerzbank plunges to loss as pandemic thwarts recovery
Germany's Commerzbank <CBKG.DE> said on Wednesday it swung to a loss in the first quarter as the impact of the coronavirus pandemic drove up loan loss provisions and risked derailing its recovery. The German lender has endured a rough few months as it halted its 2019 dividend plans, back-tracked on the sale of its Polish lender mBank <MBK.WA>, faced credit rating downgrades, and lost a long-standing sponsorship deal for the local soccer team to larger rival Deutsche Bank <DBKGn.DE>.
- Bloomberg
Pimco Is Managing to Do More With Less
(Bloomberg Opinion) -- The year started well for Pacific Investment Management Co., the fixed-income asset manager owned by German insurer Allianz SE. After pulling in 83 billion euros ($90 billion) of fresh cash from investors in 2019, the firm continued to attract new money in January and February. Then the global pandemic struck. Investor withdrawals equaled almost half of last year’s inflows, leaving Pimco with net outflows of 43 billion euros in the first quarter.Exhibiting masterly understatement, Chief Financial Officer Giulio Terzariol told Bloomberg Television, “March was a tough month.” Retail investors abandoned the market as the novel coronavirus threatened to trash the global economy.Beneath the headline decline in assets under management — Pimco’s worst drop in the five years since the surprise departure of bond maestro Bill Gross, as noted by my Bloomberg News colleagues — the firm’s recovery continues apace. That means Allianz will be dealing from a position of strength if it finally takes the plunge and decides to expand its asset-management business by buying a rival player. In the current beleaguered environment, the one variable that asset managers are able to control is their costs. As Pimco’s overall revenue grew by 18.4% in the year, to more than 1.3 billion euros, the firm was able to shave almost a percentage point from its cost-to-income ratio, extending a trend of parsimony that’s been in place for at least the past five years.Moreover, the margin Pimco is able to charge for managing other people’s money has been remarkably stable, particularly given the fee compression that the rest of the active management industry has endured amid increased competition from low-cost index-tracking products. While its first-quarter margin of 37.3 basis points was down a tad from December, it actually improved from 36.1 basis points in the year-earlier period.A year ago, Pimco’s parent toyed with the idea of buying DWS Group GmbH, when Deutsche Bank AG was mulling offloading its remaining 80% stake in the fund manager as part of its ultimately doomed attempt to merge with Commerzbank AG.In the end, neither transaction happened. But Allianz has given notice that it intends to be part of any industry consolidation. At some point, the German insurer might want to bolster its fund-management defenses against the rise of the index trackers by buying a specialist in passive strategies. With a market share of more than a quarter of Europe’s exchange-traded products, DWS may still prove attractive — if it ever comes up for sale.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Mark Gilbert is a Bloomberg Opinion columnist covering asset management. He previously was the London bureau chief for Bloomberg News. He is also the author of "Complicit: How Greed and Collusion Made the Credit Crisis Unstoppable."For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
- EQS Group
Commerzbank retains mBank - Sales process terminated
DGAP-News: Commerzbank Aktiengesellschaft / Key word(s): Miscellaneous 11.05.2020 / 14:25 The issuer is solely responsible for the content of this announcement. \- Transaction cannot be implemented at reasonable terms due to corona crisis\- Strong capital position is a good basis for the consistent implementation of the Commerzbank 5.0 strategyPolish mBank S.A. ("mBank") will remain part of the Commerzbank Group. Commerzbank has decided to retain its majority stake of 69.3% in its Polish subsidiary and to terminate the sales process. Under the current market conditions which are dominated by the coronavirus crisis, a transaction doesn't seem feasible at reasonable terms. The Bank will consistently continue to pursue its Commerzbank 5.0 strategy. The Bank's strong capital position provides a good basis for this.Commerzbank announced in September 2019 its intention to sell its majority stake in mBank. At the time the main objective of the sale was to significantly reduce risk-weighted assets and to release capital within the Group for a faster implementation of the Commerzbank 5.0 strategy. In the meantime, Commerzbank has achieved sufficient flexibility with regards to its Common Equity Tier 1 ratio."It is clear that we will only sell such a valuable asset as mBank if the terms are right. The current market environment which is marked by the corona crisis, does not allow for an attractive valuation in line with the underlying value of mBank," said Bettina Orlopp, Chief Financial Officer of Commerzbank. "Our strong capital position gives us the leeway to implement our Commerzbank 5.0 strategy and make the planned investments without the need to sell mBank."***** Press contact Margarita Thiel +49 69 136-46646 Erik Nebel +49 69 136-44986 Maurice Farrouh +49 69 136-21947*****About Commerzbank Commerzbank is a leading international commercial bank with branches and offices in nearly 50 countries. The Bank's two business segments - Private and Small Business Customers and Corporate Clients - offer a comprehensive portfolio of financial services precisely tailored to their customers' needs. Commerzbank transacts approximately 30% of Germany's foreign trade and is the market leader in German corporate banking. The Bank offers its sector expertise to its corporate clients in Germany and abroad and is a leading provider of capital market products. Its subsidiaries, comdirect in Germany and mBank in Poland, are two innovative online banks. With approximately 800 branches going forward, Commerzbank has one of the densest branch networks in Germany. The Bank serves more than 11 million private and small business customers nationwide and over 70,000 corporate clients, multinationals, financial service providers, and institutional clients worldwide. Its Polish subsidiary mBank S.A. has around 5.6 million private and corporate customers, predominantly in Poland, but also in the Czech Republic and Slovakia. In 2019 Commerzbank generated gross revenues of €8.6 billion with approximately 48,500 employees.*****Disclaimer and Forward-Looking Statement This release contains forward-looking statements. Forward-looking statements are statements that are not historical facts. In this release, these statements concern inter alia the expected future business of Commerzbank, efficiency gains and expected synergies, expected growth prospects and other opportunities for an increase in value of Commerzbank as well as expected future financial results, restructuring costs and other financial developments and information. These forward-looking statements are based on the management's current plans, expectations, estimates and projections. They are subject to a number of assumptions and involve known and unknown risks, uncertainties and other factors that may cause actual results and developments to differ materially from any future results and developments expressed or implied by such forward-looking statements. Such factors include the conditions in the financial markets in Germany, in Europe, in the USA and other regions from which Commerzbank derives a substantial portion of its revenues and in which Commerzbank holds a substantial portion of its assets, the development of asset prices and market volatility, especially due to the ongoing European debt crisis, potential defaults of borrowers or trading counterparties, the implementation of its strategic initiatives to improve its business model, the reliability of its risk management policies, procedures and methods, risks arising as a result of regulatory change and other risks. Forward-looking statements therefore speak only as of the date they are made. Commerzbank has no obligation to update or release any revisions to the forward-looking statements contained in this release to reflect events or circumstances after the date of this release. * * *11.05.2020 Dissemination of a Corporate News, transmitted by DGAP - a service of EQS Group AG. The issuer is solely responsible for the content of this announcement. The DGAP Distribution Services include Regulatory Announcements, Financial/Corporate News and Press Releases. Archive at www.dgap.de * * * Language: English Company: Commerzbank Aktiengesellschaft Kaiserstraße 16 60311 Frankfurt am Main Germany Phone: +49 (069) 136 20 Fax: - E-mail: pressestelle@commerzbank.com Internet: www.commerzbank.de ISIN: DE000CBK1001 WKN: CBK100 Indices: MDAX, CDAX, HDAX, PRIMEALL Listed: Regulated Market in Frankfurt (Prime Standard); Regulated Unofficial Market in Berlin, Dusseldorf, Hamburg, Hanover, Munich, Stuttgart, Tradegate Exchange; London, SIX EQS News ID: 1040967 End of News DGAP News Service
- EQS Group
Commerzbank AG retains mBank - Sales process terminated
Commerzbank Aktiengesellschaft / Key word(s): Miscellaneous Commerzbank AG retains mBank - Sales process terminated 11-May-2020 / 14:24 CET/CEST Disclosure of an inside information acc. to Article 17 MAR of the Regulation (EU) No 596/2014, transmitted by DGAP - a service of EQS Group AG. The issuer is solely responsible for the content of this announcement. * * *Polish mBank S.A. ("mBank") will remain part of the Commerzbank Group. Commerzbank has decided to retain its majority stake of 69.3% in its Polish subsidiary and to terminate the sales process. Under the current market conditions which are dominated by the coronavirus crisis, a transaction doesn't seem feasible at reasonable terms. The Bank will consistently continue to pursue its Commerzbank 5.0 strategy. The Bank's strong capital position provides a good basis for this.**** Disclaimer and Forward-Looking Statement This release contains forward-looking statements. Forward-looking statements are statements that are not historical facts. In this release, these statements concern inter alia the expected future business of Commerzbank, efficiency gains and expected synergies, expected growth prospects and other opportunities for an increase in value of Commerzbank as well as expected future financial results, restructuring costs and other financial developments and information. These forward-looking statements are based on the management's current plans, expectations, estimates and projections. They are subject to a number of assumptions and involve known and unknown risks, uncertainties and other factors that may cause actual results and developments to differ materially from any future results and developments expressed or implied by such forward-looking statements. Such factors include the conditions in the financial markets in Germany, in Europe, in the USA and other regions from which Commerzbank derives a substantial portion of its revenues and in which Commerzbank holds a substantial portion of its assets, the development of asset prices and market volatility, especially due to the ongoing European debt crisis, potential defaults of borrowers or trading counterparties, the implementation of its strategic initiatives to improve its business model, the reliability of its risk management policies, procedures and methods, risks arising as a result of regulatory change and other risks. Forward-looking statements therefore speak only as of the date they are made. Commerzbank has no obligation to update or release any revisions to the forward-looking statements contained in this release to reflect events or circumstances after the date of this release. Contact: Christoph Wortig Head of Investor Relations Commerzbank AG Investor Relations Tel.: +49 69 136 - 21331 e-mail:ir@commerzbank.com * * *11-May-2020 CET/CEST The DGAP Distribution Services include Regulatory Announcements, Financial/Corporate News and Press Releases. Archive at www.dgap.de * * * Language: English Company: Commerzbank Aktiengesellschaft Kaiserstraße 16 60311 Frankfurt am Main Germany Phone: +49 (069) 136 20 Fax: - E-mail: pressestelle@commerzbank.com Internet: www.commerzbank.de ISIN: DE000CBK1001 WKN: CBK100 Indices: MDAX, CDAX, HDAX, PRIMEALL Listed: Regulated Market in Frankfurt (Prime Standard); Regulated Unofficial Market in Berlin, Dusseldorf, Hamburg, Hanover, Munich, Stuttgart, Tradegate Exchange; London, SIX EQS News ID: 1040939 End of Announcement DGAP News Service
- Reuters - UK Focus
LIVE MARKETS-EU spreads pressure: ECB will come to the rescue
You can share your thoughts with Thyagaraju Adinarayan (thyagaraju.adinarayan@thomsonreuters.com), Joice Alves (joice.alves@thomsonreuters.com) and Julien Ponthus (julien.ponthus@thomsonreuters.com) in London and Stefano Rebaudo (stefano.rebaudo@thomsonreuters.com) in Milan. Spreads between treasury bond yields of Europe's peripheral countries and Germany's, a key gauge for the valuation of listed banks, will be under pressure in the coming weeks as the European Union seeks to finalise a deal about a rescue package to protect the economy from the blow of the coronavirus outbreak.
- Reuters - UK Focus
LIVE MARKETS-Equity keeps holding, but outflows are back
* Crude futures rebound Welcome to the home for real-time coverage of European equity markets brought to you by Reuters stocks reporters. You can share your thoughts with Thyagaraju Adinarayan (thyagaraju.adinarayan@thomsonreuters.com), Joice Alves (joice.alves@thomsonreuters.com) and Julien Ponthus (julien.ponthus@thomsonreuters.com) in London and Stefano Rebaudo (stefano.rebaudo@thomsonreuters.com) in Milan. U.S. and euro government bonds this week had inflows of $1.7 billion and $300 million respectively, U.S. and Euro high yield credit funds had $2.3 billion and $400 million; while equities saw outflows of $7.3 billion, Barclays highlights in its Equity Strategy Market Review.
- Reuters - UK Focus
GLOBAL MARKETS-Stocks fall on worries over EU stimulus details, coronavirus drug
Global shares fell on Friday, hit by delays to an agreement on divisive details of the European Union's stimulus package and doubts about progress in the development of drugs to treat COVID-19. European stocks were 0.3% lower, with London's FTSE 100 shedding 0.6% as data showed UK retail sales crashed in March. "It's a negative session," said François Savary, chief investment officer at Swiss wealth manager Prime Partners.
- Reuters - UK Focus
LIVE MARKETS-Airlines see more troubles ahead when lockdowns are lifted
* Crude futures rebound Welcome to the home for real-time coverage of European equity markets brought to you by Reuters stocks reporters. You can share your thoughts with Thyagaraju Adinarayan (thyagaraju.adinarayan@thomsonreuters.com), Joice Alves (joice.alves@thomsonreuters.com) and Julien Ponthus (julien.ponthus@thomsonreuters.com) in London and Stefano Rebaudo (stefano.rebaudo@thomsonreuters.com) in Milan. Morgan Stanley, which downgraded the sector to 'cautious' from 'in-line', sees more risks of its bear case scenario becoming reality.
- Reuters - UK Focus
LIVE MARKETS-Opening snapshot: German banks and Signify
* Crude futures rebound Welcome to the home for real-time coverage of European equity markets brought to you by Reuters stocks reporters. You can share your thoughts with Thyagaraju Adinarayan (thyagaraju.adinarayan@thomsonreuters.com), Joice Alves (joice.alves@thomsonreuters.com) and Julien Ponthus (julien.ponthus@thomsonreuters.com) in London and Stefano Rebaudo (stefano.rebaudo@thomsonreuters.com) in Milan. European bourses have opened well in negative territory after EZ leaders agreed yesterday to build a trillion euro emergency fund, but left divisive details until the summer and as fears of a lasting hit from the coronavirus keep the market in a risk-off mood.
- Reuters - UK Focus
LIVE MARKETS-On the radar: Commerzbank, Deutsche Bank, Nestle, Sanofi
* Crude futures rebound Welcome to the home for real-time coverage of European equity markets brought to you by Reuters stocks reporters. You can share your thoughts with Thyagaraju Adinarayan (thyagaraju.adinarayan@thomsonreuters.com), Joice Alves (joice.alves@thomsonreuters.com) and Julien Ponthus (julien.ponthus@thomsonreuters.com) in London and Stefano Rebaudo (stefano.rebaudo@thomsonreuters.com) in Milan. European bourses are set to open lower as concerns about the economic impact of the coronavirus outbreak keep the market in a risk-off mood.
- Bloomberg
SAP Drops Co-CEO Role After Six Months as Virus Upends Plans
(Bloomberg) -- SAP SE Co-Chief Executive Officer Jennifer Morgan, appointed in October to the top executive post alongside Christian Klein, will abruptly leave the German software company at the end of April, after the Covid-19 pandemic caused problems with its leadership structure.Klein, 39, will remain in the CEO role, SAP said late Monday in a statement. He joined the company as a student in 1999 and had been chief operating officer since April 2016 before his October promotion, with Morgan, to replace Bill McDermott in the top job. Klein has been a member of SAP’s executive board since 2018.The company said it is shifting to a lone CEO model now to provide a clearer leadership structure in the face of business challenges posed by the Covid-19 pandemic. SAP also posted its first quarter results on Tuesday, stating business activity in the first two months of the quarter was “healthy” but as the spread of the coronavirus intensified a significant amount of new business was postponed.SAP fell 2.4% to 111 euros at 9:49 a.m. in Frankfurt on Tuesday. The stock has declined 7.8% this year.“Jen and I really started with a joint agenda,” said Klein in a call with reporters. “The reason we decided to come back to a sole CEO model was because of the outbreak of the pandemic. There was no exact date to when SAP would have come back to a sole CEO model but in these turbulent times we thought now was the right time.”SAP had been committed to the co-CEO structure, but when the coronavirus hit, it became clear that having two people in charge was no longer tenable, according to a person with knowledge of the matter. Morgan is the first female chief executive of a DAX-listed company.The leadership structure was “disorganized and, at times, chaotic,” said the person, who asked not to be named discussing the company’s internal dynamics. It took longer to get some things done because, in certain instances, managers needed sign off from two different CEO offices, this person said. “It was driving people crazy.”Over time, two distinct power centers emerged, the person said. One was based in the U.S. under Morgan, who is American. The other, under Klein, was anchored in Germany, the site of the company’s headquarters, its greatest sphere of influence and Klein’s homeland, said the person. Klein also benefited from his close ties to Chairman and co-founder Hasso Plattner, this person said.“The leadership model has many benefits,” an SAP spokeswoman said. “But the current environment requires the company to take swift and determined action.”SAP also said that due to current uncertainty regarding the duration and severity of the Covid-19 pandemic, it can’t predict whether its response will be effective in mitigating the impact of the virus on its business and results of operations. On Tuesday it reported:Total revenue in 2020 will be 27.8 billion euros ($30.1 billion) to 28.5 billion euros, down from a previous forecast of as much as 29.7 billion euros, SAP said on 8 April in its preliminary resultsCloud revenue increased 27% to more than 2 billion euros for the first quarter of 2020 while total revenue was up 7% to more than 6.5 billion eurosSAP is not planning on applying for state wage support or requesting governmental aid amid the pandemic, Luka Mucic, chief financial officer, said on the call with reportersMorgan, 48, joined SAP in 2004 and had been president of the software giant’s cloud business group before being named co-CEO. She became the first American woman appointed to SAP’s executive board in 2017 when she was named president of the Americas and Asia.“The market has never really appreciated the co-CEO structure, though we believe SAP will lose a dedicated cloud sales person with Jennifer,” Florian Treisch, analyst at Commerzbank AG wrote in a note Tuesday.McDermott’s departure last year was unexpected, but the new co-CEOs had been on investors’ “short list” to take over in future, Citigroup analysts including Walter Pritchard said in a note at the time of their appointment.(Updates with shares in fourth paragraph, analyst comment in penultimate)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
- Bloomberg
Giant Funds Are a Model for the Post-Coronavirus Future
(Bloomberg Opinion) -- Governments are helping businesses survive the debilitating effects of the coronavirus by allocating state funds to various rescue packages to keep companies alive and preserve as many jobs as possible. With unprecedented amounts of economic stimulus planned to combat an unparalleled situation, it’s essential that the authorities spare at least some attention to what a post-pandemic exit strategy might look like. Once the virus is subdued and the lockdowns end, governments should convert a chunk of the aid they’ve distributed into equity stakes in the recipients, with the ensuing portfolio of holdings assembled into sovereign wealth funds.Norway currently has the world’s biggest sovereign wealth fund, overseeing about $945 billion and funded by the nation’s oil revenue. Singapore has had a wealth fund for more than four decades. Egypt, Senegal and Turkey have all set up wealth funds in recent years to manage their state-owned companies, with South Africa saying earlier this year that it plans a similar move.Countries in Europe have toyed with the idea in the past. In August, a draft proposal for a “European Future Fund” suggested an initial 100 billion-euro ($110 billion) pot could be set aside to invest in strategic industries in the European Union. But as my colleague Ferdinando Giugliano argued at the time, the EU is not a sovereign state, and such a fund would just divert existing budget resources rather than tapping a pool of wealth.In the U.K., the May 2017 Conservative Party manifesto proposed what it called Future Britain funds, which would “hold in trust the investments of the British people, backing British infrastructure and the British economy.” The pitch said the money would come from “shale gas extraction, dormant assets and the receipts of sale of some public assets.” Almost three years later, there’s still no sign of those plans being enacted. (That’s probably just as well given their paltry financial underpinning; as myself and my colleague Marcus Ashworth wrote at the time, those sources would have provided a minuscule capital base, even before fracking was banned in Britain.)But the current crisis provides an opportunity for individual countries to make good on those vague promises by setting up wealth funds that are big enough to count as full-blown assets to society, given the scale of financial assistance that’s likely to be required to get through these dark days.They could start by assigning existing state investments to wealth funds. The U.K. government, for example, still owns about 60% of Royal Bank of Scotland Group Plc, more than a decade after bailing out the ailing lender to the tune of more than 45 billion pounds ($56 billion) as part of a wider rescue of the domestic banking industry. The German government has a stake of almost 16% in Commerzbank AG, while Belgium and France have control of Dexia SA, split 53% to 47%.The global financial crisis made many banks wards of their states. Formalizing those stakes in wealth funds would be a way to start building state-owned asset portfolios. During normal times, governments could be sleeping equity partners. But in times of crisis — like now — governments would have a more direct pathway to influence lenders to help borrowers weather any economic storm. For the U.K., creating a wealth fund would solve the issue of preserving vital domestic infrastructure without handing free money to foreign conglomerates. The owners of Heathrow Airport, for example, include Qatar Holding, the government of Singapore’s GIC Pte Ltd., and the China Investment Corp. By making aid conditional on receipt of equity, Britain would be getting a stake at current distressed values in return for bailout funds.Today’s situation demands aid packages for a swathe of industries feeling the pain, including automakers and travel companies. If having such a broad range of stakes feels too interventionist, wealth-fund holdings could be restricted to infrastructure that’s vital to the economic functioning of a country. Though that could prove to be a tough distinction; given initial lockdown experiences, an argument could be made that suppliers of internet broadband and food delivery should qualify.For those who still insist the state should stay out of private enterprises, note that governments are already effectively telling companies how to run their affairs in return for aid. Earlier this week, Germany asked companies seeking help to suspend their dividends, with France also asking the same from firms that defer tax liabilities. German Economy Minister Peter Altmaier also wants senior executives to “contribute in emergencies, especially with respect to bonus payments,” according to an interview with the Frankfurter Allgemeine Zeitung at the weekend.One of the new realities of the post-virus economy will be increased state involvement in business. Companies are likely to come under pressure to shorten their supply chains and bring more manufacturing back home, wherever home may be. The lines of production will become shorter, as regional ties replace at least some of the worldwide outsourcing that has been a keystone of the globalized economy. That will be easier to enforce if governments’ holdings give them seats on corporate boards.Shareholdings would give governments additional clout to influence better corporate behavior as more nations embrace their responsibilities to the future of the planet. Until now, asset managers have long been leading the drive to force firms to give greater emphasis to environmental, social and governance issues.A decade ago, a key complaint about the rescue of the global financial system was that public money was used to compensate for private risk taking gone awry. While this crisis is undoubtedly different, there’s still a danger that as governments pledge billions of dollars, euros and pounds to businesses, public support will wane as the scale of the financial challenge becomes apparent. Building equity stakes that belong to the nation will help offset voter mistrust about the wisdom of such largess, allowing everyone to participate in the economic recovery that the disbursements are designed to facilitate.As the saying goes, never let a serious crisis go to waste.This column does not necessarily reflect the opinion of Bloomberg LP and its owners.Mark Gilbert is a Bloomberg Opinion columnist covering asset management. He previously was the London bureau chief for Bloomberg News. He is also the author of "Complicit: How Greed and Collusion Made the Credit Crisis Unstoppable."For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
- Bloomberg
Banker Bonuses Are a Pre-Coronavirus Thing
(Bloomberg Opinion) -- Financial regulators are applying all of the lessons of the 2008 credit crisis at record speed. In the past few weeks, they’ve worked with central banks to pump liquidity into markets and to make it easier for banks to lend. It’s essential now that lenders keep providing money to companies and households whose incomes have evaporated in the Covid-19 lockdowns. If the banks stop functioning, what hope for the rest of the economy?The next chapter in European regulators’ crisis playbook is ensuring that the banks don’t hand much of their excess capital to investors or keep paying hefty bonuses to senior staff. Supervisors are trying to make sure that financial firms remain solid by easing their capital rules, thereby freeing up hundreds of billions of dollars — that places a heavy burden on the banks to act responsibly. Shares in British banks, including HSBC Holdings Plc and Barclays Plc, fell sharply on Wednesday after they halted dividends at the Bank of England’s request.Regulators are also preempting a popular backlash by discouraging cash bonuses to bankers. This makes perfect sense, given the support that lenders have already received by way of looser regulation and state loan guarantees.As we’ve heard from supervisors and banking executives in recent weeks, banks — for now — remain part of the solution to the unprecedented economic shock, rather than the problem. This isn’t 2008.The excessive banker pay that fueled the risk binge in the run-up to the Lehmans meltdown is still fresh in people’s minds. What’s more, during the global financial crisis, banks often took too long to suspend dividends and buybacks, leaving themselves thinly capitalized as losses piled up and hastening the need for government bailouts. Excessive pay during and soon after the crisis, including at bailed-out institutions, rightly infuriated the taxpayers that were left footing the bill.More than a dozen years after the financial crisis, a number of Europe’s biggest lenders — Royal Bank of Scotland Group Plc, ABN Amro Bank NV and Commerzbank AG — are still at least partly state owned. Little surprise then that the U.K. regulator “expects banks not to pay any cash bonuses to senior staff, including all material risk takers,” while the European Banking Authority is urging firms to pay conservative bonuses and consider deferring awards for a longer period and in shares.It could be worse. While bankers won’t be able to cash in on their deferred compensation from previous years’ share awards after stocks plunged, they will have already received their 2019 variable cash compensation by now, and they’ll have plenty of time to prepare for next year.Take the 1,700 traders and bankers at Barclays, who’ll be affected by the measures. About 45% of their average pay of 825,000 pounds ($1 million) consists of fixed pay, 22% comes from share awards, and 23% is a cash bonus (of which 58% is deferred), according to Citigroup Inc. analysts. While cash is king — especially during an economic crisis — getting more of that pay package in shares wouldn’t necessarily be a disaster, even if people had to wait a few years to sell. Assuming stocks don’t bounce back too far from their current levels, bankers might be getting a lot of very cheap stock in 2021.And however painful the hit, regulators are probably just insisting on something that the markets will probably take care of over the rest of the year anyway. The first quarter may have been a bumper three months for trading in financial markets because of all of the volatility, activity could well be subdued over the coming quarters as the recession really hits. That would depress bonuses anyway. The very best financiers will expect to see their fixed pay rise to sweeten the blow, but for most of the thousands of bankers and traders fortunate enough to keep their jobs, lavish compensation will be a thing of the past. The crisis will be as Darwinian for investment banking as it is for every other pocket of the economy. Hanging on to your chair will be your 2021 bonus.This column does not necessarily reflect the opinion of Bloomberg LP and its owners.Elisa Martinuzzi is a Bloomberg Opinion columnist covering finance. She is a former managing editor for European finance at Bloomberg News.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
- Reuters
Fitch downgrades Deutsche Bank outlook, cuts Commerzbank
Fitch has put Deutsche Bank <DBKGn.DE> on a negative credit outlook and cut the rating of Germany's second biggest listed lender Commerzbank <CBKG.DE> to BBB due to the coronavirus crisis. The credit ratings agency also lowered its view of other German lenders, saying in a statement released on Monday that it "considers the risks to banks' credit profiles to be clearly skewed to the downside". Fitch, which last year downgraded Deutsche Bank to BBB, said the negative outlook was due to "heightened near-term risks to the bank's earnings, capitalisation and additional execution risks to its restructuring".
- Reuters - UK Focus
INSIGHT-Banks struggle to ride to the rescue in Europe's cash crunch battle
MILAN/MADRID/FRANKFURT, March 24 (Reuters) - Corrado Sforza Fogliani is on the frontlines of European efforts to keep the region's economy alive amid the coronavirus pandemic. Buried in paperwork and with Rome and banking lobbies still at odds over who should be on the hook for defaults when a six-month debt holiday ends, Banca di Piacenza's loan officers have only been able to process a fraction of the 1,000 applications they have received.
- Reuters - UK Focus
Deutsche Bank party short lived as coronavirus threatens recovery
Deutsche Bank's cancellation of its 150th anniversary ceremony is not the only celebration that Germany's biggest bank is having to shelve as a result of the coronavirus outbreak. Shares in Deutsche Bank fell to a record low on Monday, sliding by as much as 17% in one its biggest drops in decades as the bank announced new measures to shield employees from the coronavirus outbreak, including the cancellation of its Berlin birthday bash on March 21. Deutsche Bank is not the only lender whose prospects are dimmed by the coronavirus outbreak, which is hitting German peers such as Commerzbank and European rivals.
- Reuters - UK Focus
CORRECTED-Debt sales make a comeback after coronavirus shutdown
Issuers sold 5.25 billion euros on Europe's debt capital markets on Tuesday, a day after stocks rallied strongly on hopes of central bank support. UK analytics company Relx raised 2 billion euros of four, eight and 12-year bonds, while U.S. industrial conglomerate Honeywell International, which recently saw a surge in demand for its protective face masks, priced 1 billion euros of four and 12-year bonds.
- Reuters
Commerzbank investor Capital Group increases stake to almost 5%
Capital Group has increased its stake in Commerzbank <CBKG.DE> to 4.82% from 2.93%, a regulatory filing showed, making the Los Angeles-based investor one of the German bank's largest shareholders. Capital Group earlier this month bought a big stake in rival Deutsche Bank <DBKGn.DE>, marking a vote of confidence in that troubled lender. Shares in Commerzbank briefly jumped on the news of the Capital investment, making up some of its earlier losses, but were still trading 5% lower early afternoon in Frankfurt amid a global selloff.
- Reuters - UK Focus
LIVE MARKETS-Europe falls from record, Apple suppliers hit, Italy banks on fire
You can share your thoughts with Thyagaraju Adinarayan (thyagaraju.adinarayan@tr.com), Joice Alves (joice.alves@tr.com), Julien Ponthus (julien.ponthus@tr.com) in London and Danilo Masoni (danilo.masoni@tr.com) in Milan.
- Bloomberg
At Last, Italy Tries a $5.3 Billion Bank Deal
(Bloomberg Opinion) -- Italian banks embarking on a round of consolidation was always a matter of when, not if. Meager profitability, a fragmented industry and a desperate need for investment are obvious ingredients for M&A. Lenders have rid themselves of most of the bad loans that crippled Italy’s banks after the financial crisis, so dealmaking should be unhindered.Intesa Sanpaolo SpA’s surprise $5.3 billion offer for a smaller Italian rival in a four-way carve-up may not have been what investors had in mind. Intesa is already Italy’s biggest bank and its target, Unione di Banche Italiane SpA — the country’s fourth-largest — was seen as more of an acquirer of weaker rivals than a target.But the deal may provide the jolt the European industry needs. Almost a year has passed since the failed effort to combine Germany’s Deutsche Bank AG and Commerzbank AG through a more complex, risky deal. The completion of a simpler union could embolden chief executives elsewhere in the continent too.Intesa’s unsolicited all-stock bid, at a 25% premium to the closing price, would make it one of the biggest European banking mergers since the Lehman crisis. UBI, which hasn’t commented on the approach, was caught off guard. Just hours earlier in London, it presented its strategy as a standalone company.A deal would move Intesa into the group of top 10 European lenders, measured by operating income. Though UBI investors could argue for juicier terms, the strategic and financial rationale for a deal is compelling. The European Central Bank’s initial positive feedback on the merger should improve Intesa CEO Carlo Messina’s chances of persuading his UBI counterpart.A takeover would create a joint business with a market share of about 21% in loans and deposits, 23% in asset management and 19% in life insurance. To avert antitrust concerns, Intesa has agreed to sell as many as 500 branches to a regional lender and to dispose of insurance activities too. The banks have similar business models and the 5,000 anticipated job cuts are expected to be voluntary (3,400 job losses have already been announced by the banks). The deal would bring 510 million euros of cost savings and 220 million euros of revenue synergies, according to Intesa. The buyer is promising to pay a cash dividend of 0.2 euros per share for 2020, and higher from 2021, above current consensus estimates. To cover the deal’s cost, Intesa expects to benefit from about 2 billion euros of negative goodwill to help pay for integration expenses and a deeper clean-up of bad loans.Investors like what they’re hearing. A bond UBI sold five weeks ago has delivered an impressive 12% return, making it the best-performing bond in Europe this year. UBI shares rose as much as 29% on Tuesday, above the offer price; Intesa shares rose as much as 3.6%.Some investors had hoped that Intesa would make a bolder move to diversify its business away from Italy and to reduce its reliance on lending income. But support from the ECB for the UBI approach would at least show the regulator is willing to countenance much-needed M&A in Italy, and Europe.Messina’s unexpected move might inspire a broader consolidation. As sub-zero interest rates persist and economies sputter, European banks’ low profitability is unlikely to improve. Cross-border deals are still complicated by different national insolvency laws and the absence of a common European deposit-insurance scheme. At least Messina is doing something.To contact the author of this story: Elisa Martinuzzi at emartinuzzi@bloomberg.netTo contact the editor responsible for this story: James Boxell at jboxell@bloomberg.netThis column does not necessarily reflect the opinion of Bloomberg LP and its owners.Elisa Martinuzzi is a Bloomberg Opinion columnist covering finance. She is a former managing editor for European finance at Bloomberg News.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
- Reuters - UK Focus
LIVE MARKETS-Coronavirus' natural-disaster effect on growth
You can share your thoughts with Thyagaraju Adinarayan (thyagaraju.adinarayan@tr.com), Joice Alves (joice.alves@tr.com), Julien Ponthus (julien.ponthus@tr.com) in London and Danilo Masoni (danilo.masoni@tr.com) in Milan.
