|Bid||0.00 x 200000|
|Ask||0.00 x 110000|
|Day's range||5.28 - 5.41|
|52-week range||4.66 - 8.94|
|Beta (3Y monthly)||1.90|
|PE ratio (TTM)||9.19|
|Earnings date||7 Nov 2019|
|Forward dividend & yield||N/A (N/A)|
|1y target est||11.78|
(Bloomberg) -- Oil turned positive hours after a U.S. government report showed large declines in fuel inventories, outweighing a bigger-than-expected crude build.Futures rose 1.1% in New York on Thursday. The Energy Information Administration reported that American gasoline and distillate supplies shrank by a combined 6.4 million barrels after almost 17% of domestic refining capacity went dark last week. Crude also followed equities higher amid a spate of mostly positive earnings reports.“The big draws on gasoline, on distillates is very supportive,” said Phil Flynn, senior market analyst at Price Futures Group Inc. in Chicago.Prices tumbled earlier in the session after EIA data showed U.S. crude stockpiles swelled at more than three times the rate analysts forecast in a Bloomberg survey.Crude prices have been under pressure for months over protracted concerns about the strength of global demand and escalating output from U.S. shale fields.“These weekly inventory reports are short-term trading blips,” said Nick Holmes, who helps manage about $7.5 billion at Tortoise in Leawood, Kansas. “Concern about where demand is going to shake out for the rest of this year and 2020 is weighing on the price of crude.”West Texas Intermediate for November delivery rose 57 cents to settle at $53.93 on the New York Mercantile Exchange.Brent crude for December settlement rose 49 cents to close at $59.91 on the London-based ICE Futures Europe Exchange, and traded at a premium of $5.88 to WTI for the same month.The December 2019-December 2020 WTI spread widened 46 cents to $2.53 a barrel, as export demand is likely to increase as shipping costs retreat from sky-high levels. Freight rates shot up in recent weeks after the U.S. slapped sanctions on some subsidiaries of a China’s COSCO Shipping Corp.To contact the reporters on this story: Jacquelyn Melinek in New York at email@example.com;Sheela Tobben in New York at firstname.lastname@example.orgTo contact the editors responsible for this story: David Marino at email@example.com, Catherine Traywick, Christine BuurmaFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
WARSAW/FRANKFURT (Germany) (Reuters) - Commerzbank is sounding out potential buyers of its stake in Polish lender mBank ahead of a formal sale process which is expected to launch in coming months, people familiar with the matter said. MBank has hired JPMorgan as an advisor, while Goldman Sachs is advising Commerzbank, two sources said. Germany's second-largest lender, which is seeking funds to finance its recently announced restructuring, said in September its supervisory board had approved plans to sell the 69.3% stake in mBank, worth about $2.65 billion.
(Bloomberg Opinion) -- Attempts to accelerate the shakeup of German banking haven’t had much success in the past year. First, talks to combine two state-owned regional lenders fell apart; then Deutsche Bank AG and Commerzbank AG tried but (for good reason) were unable to find a way to make a merger work. Now a third combination is on the table.This time too, any real excitement about needed consolidation in a deeply fragmented market is premature. Putting together a regional, public-sector bank, Helaba, with an asset management business, DekaBank, is but a baby step toward the industry’s restructuring. Plus political goodwill appears to be lacking still for the transformational, and expensive, adjustments needed to revive the companies’ profitability.State-backed lenders control about 25% of the nation’s banking assets and cooperative banks another 10%, creating fierce, low-margin competitors to the third pillar of German banking: private commercial lenders such as Deutsche Bank and Commerzbank. Earning a decent return has become difficult for everybody.A year ago, Germany’s state-backed lenders considered an ambitious plan to reorganize one part of the country’s public-sector finance sector: the Landesbanken, whose business models were shown to be deeply flawed by the financial crisis. Landesbanken invest money for local savings banks (or Sparkassen) and have ventured out internationally and taken on more risk. Weakened by losses on everything from toxic asset-backed securities to shipping loans, they’ve received several bailouts since the crisis.Indeed it was a capital shortfall at one Landesbank, NordLB, that encouraged discussions last year to combine it with another, Helaba. Coming just after the first Landesbank privatization, of HSH Nordbank, the deal would have marked an important step in rationalizing these institutions. Ultimately, having one Landesbank catering to the nation’s 380 or so savings banks — rather than half a dozen — is probably sufficient.Yet the NordLB plan needed the backing of the two federal states that control the lender, and local governments haven’t exactly been jumping at the chance to loosen their grip. Private buyers also walked away from a bid for NorldLB.It’s no suprise then that the latest attempt at a big German merger goes in a different direction. Helaba is largely controlled by the savings banks rather than directly by local government and Deka is the asset management unit of the savings banks, making a combination easier to achieve (or at least that’s the hope). Having a new, bigger entity with about 260 billion ($286 billion) euros of assets might even attract other Landesbanken to join the club.Still, this all still leaves the future of the ailing NordLB in the hands of the states of Lower Saxony and Saxony-Anhalt. Worse, the states are about to give it more cash in a rescue that could further distort competition, a violation of European Union state aid rules.As things stand, the states will inject 1.7 billion euros into NordLB, with another 1.14 billion euros coming from the German Savings Bank Association (DSGV) and publicly owned savings banks. To stop it breaching state aid rules, the recapitalization must pass a so-called private investor test: The overhauled business needs to look like something a normal investor would back.In fairness, the plan is ambitious. NordLB anticipates shrinking its balance sheet from about 150 billion euros to 95 billion euros, refocusing on its regional business and ultimately cutting its cost to income ratio below 50% by 2024. By European standards that would be an extremely efficient bank. The EU average cost-income ratio is closer to 70%.The European Commission is still reviewing whether the plan adds up to state aid. It’s a tricky question; Brussels not letting the state entities salvage their own investment might be seen as discriminatory.But if the greater good of German lending is the motivation, namely pruning an over-banked sector, you have to ask whether it makes sense to keep NordLB afloat at all costs. Berlin has taken a dim view when Italy has done similar with its lenders. A Helaba merger with Deka would be little consolation.To contact the author of this story: Elisa Martinuzzi at firstname.lastname@example.orgTo contact the editor responsible for this story: James Boxell at email@example.comThis column does not necessarily reflect the opinion of the editorial board or 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/opinion©2019 Bloomberg L.P.
(Bloomberg) -- European stocks sank, snapping two days of gains, amid renewed trade tensions between China and the U.S. and as Brexit talks faced yet another impasse.The Stoxx Europe 600 Index was down 0.9% as of 12:51 p.m. in London, with all industry groups lower. China indicated it would strike back after the U.S. blacklisted eight of its tech giants, while Bloomberg reported that the Trump administration is moving ahead with discussions about possible restrictions on capital flows into China, with a particular focus on investments made by U.S. government pension funds.“There’s a clear escalation between the U.S. and China today, which doesn’t bode well for a deal later this week,” said Alexandre Baradez, chief market analyst at IG France. “A big chunk of the gains in European stocks this year has been on hopes of a trade deal, so clearly the risk is on the downside at this point.”The drop in European stocks was broad based, with travel and leisure shares among the worst hit after EasyJet Plc postponed an update on its outlook for next year. Banks also tumbled, with both Deutsche Bank and Commerzbank down 3.8%.In the U.K., Prime Minister Boris Johnson told German Chancellor Angela Merkel a Brexit deal is essentially impossible if the EU demands Northern Ireland should stay in the bloc’s customs union, sending the pound lower. The FTSE 100, which tends to have a negative correlation to the currency, fell 0.2%, while the more domestic-focused FTSE 250 index lost 0.9%.Last week, European equities had their worst drop in two months as concerns about global growth sent investors running for the exit.Among the biggest movers, Qiagen NV tumbled 20% after reporting disappointing earnings and as its chief, Peer Schatz, decided to step down. Uniper SE dropped 7.5% after Fortum Oyj agreed to acquire a majority stake in the company.To contact the reporters on this story: Ksenia Galouchko in London at firstname.lastname@example.org;Namitha Jagadeesh in London at email@example.comTo contact the editors responsible for this story: Blaise Robinson at firstname.lastname@example.org, John ViljoenFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- The battle for control of Osram Licht AG is set to enter a new round after Austria’s AMS AG vowed to keep fighting after a sweetened 4 billion euro ($4.4 billion) offer failed.AMS, a supplier to Apple Inc., will seek a regulator nod to raise its 19.99% stake in Osram. As the biggest shareholder in the German lighting maker, AMS’s approval has become key for any would-be rival bidder. Osram has said private equity investors Bain Capital and Advent International are inspecting its books with a plan to make an offer.“We doubt private equity will launch a superior bid given AMS has built up a 19.99% stake in the meantime,” Commerzbank said in a note. “While we cannot rule out that AMS might make another push, timing is yet unclear, so we attach a greater likelihood to a potential cooperation only.”German takeover law doesn’t allow a new bid within one year unless the target gives its consent, as well as stipulating that an offer needs to be made if an investor crosses a 30% ownership threshold. AMS’s pursuit took a setback Friday, when it announced its offer failed to attract enough support from shareholders. Osram investors had tendered only 51.6% of their shares, short of a 62.5% threshold.Osram fell as much as 4.5% to 39 euros, the most in two months, while shares of AMS declined as much as 5.8%.AMS’s failed bid extends a period of protracted uncertainty for Osram, which emerged as a takeover target last year after warning trade friction and a cooling of the car industry had clouded the outlook for 2019. The former division of Siemens AG gets about half of its revenue from the automotive sector. Subsequent profit warnings further eroded investor confidence, sending shares tumbling until the takeover battle took hold.Osram confirmed talks with Bain and Carlyle, which was later replaced by Advent, in February after they were first reported by Bloomberg News. A bidding war broke out in July when AMS lobbed a higher offer. The Austrian company has drawn criticism from Osram unions and employee representatives on the board, as well as management due to concerns about promised synergies as well as the deal’s financing.Following the months-long takeover battle against private equity suitors, AMS said the combination remains compelling and pledged to continue to “explore strategic options” for a takeover. Bain and Advent are inspecting Osram’s books “with a view to submitting an offer,” Osram said in a separate statement.AMS, a supplier of facial recognition technology for Apple’s iPhone, has said it would invest in the company’s Regensburg, Germany site that makes high-tech chip components, but would sell the digital division that makes lighting controls, stage and theater lights.Century-old Osram, based in Munich, started out making light bulbs, pivoting in recent years under Chief Executive Officer Olaf Berlien to products like iris scanners and infrared emitters. The refocus was contentious, leading to a boardroom clash over strategy and a public spat with Siemens before the German engineering giant sold down its stake.To contact the reporter on this story: Oliver Sachgau in Munich at email@example.comTo contact the editors responsible for this story: Tara Patel at firstname.lastname@example.org, Elisabeth Behrmann, Jennifer RyanFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- Explore what’s moving the global economy in the new season of the Stephanomics podcast. Subscribe via Pocket Cast or iTunes.The U.S. economy’s growth rate is losing speed, prompting questions over how slow it can go and still avoid crashing into a recession.Whereas expansion below 2% used to almost guarantee the economy would subsequently contract, some economists now reckon the U.S. can wobble around 1%-1.5% without falling over.The decline in the economy’s so-called stall speed is a relief after data released Tuesday signaled the weakest manufacturing sector in a decade. It still leaves the Federal Reserve under pressure to cut interest rates and President Donald Trump facing challenges heading into next year’s election.Whether the longest expansion in history remains intact may ultimately depend on whether consumers are able to maintain spending enough to offset the slump in manufacturing amid the U.S.-China trade war.“Suddenly the idea of stall speed is much more important today than it has been for most of the expansion,” said Stephen Gallagher, chief U.S. economist at Societe Generale SA. “The economy is running on one engine, and that’s the consumer.”At Commerzbank AG, currency strategist Ulrich Leuchtmann told clients in a report on Wednesday that “the fact that stall speed is becoming an issue of common interest” may undermine demand for U.S. assets.Taking a page from aviation, in which the stall speed is the slowest a plane can fly while still maintaining a level flight, the economic equivalent is the point at which growth is no longer self-sustaining.Consumer ResponseThat happens when consumers and companies pull back in the face of the lackluster economic performance.“When economic actors become sufficiently concerned -- whether justified or not -- a mild slowdown can easily become worse,” Eric Lascelles, chief economist at RBC Global Asset Management Inc., wrote in a report last month.The outlook for growth has indeed softened, with the manufacturing sector already slipping into a recession during the first half of the year, capital investment weakening and job gains moderating. Data out Wednesday from the ADP Research Institute showed that hiring at U.S. companies is cooling, with employers adding 135,000 jobs in September. Analysts expect growth in gross domestic product to slow to 1.7% next year.In expansions dating back to the 1940s, real GDP growth below 2% was almost always followed by a recession, according to Lascelles. Now, he and other economists expect the economy can avoid buckling at that pace. A reduced stall speed means growth can be slower and monthly payroll gains can be softer and still sustain the expansion.Growth PotentialThe stall speed has largely declined because the potential growth rate of the economy has slowed.The two concepts are closely tied. Potential growth is the pace at which the economy can expand without inflation heating up. Right now, the Fed sees potential growth at 1.9%. Predictions by the Congressional Budget Office for the rate have also come down over time. It’s eased amid demographic changes like slower population growth and softer productivity gains.“The problem here is if potential growth is slowing, what constitutes a rapid expansion today is very different than what it looked like maybe 40 years ago,” said Michael Gapen, chief U.S. economist at Barclays Plc.And the expansion has been lackluster. Since the end of the recession in 2009, GDP has increased about half as much on a percentage basis as it did during the 1991-2001 expansion, the nation’s second-longest. Wage growth has remained subdued and inflation has repeatedly missed the Fed’s 2% target.What Our Economists Say“We expect stall speed for the economy to be in the vicinity of 1.4-1.5% real GDP growth (in year-on-year terms). Below that, household income creation slows to such a pace that consumers are unable to shoulder the growth burden.”--Carl Riccadonna and Yelena Shulyatyeva, Bloomberg EconomicsMore VulnerableMost economists predict the economy can stay above their self-defined stall speed level next year, but Joachim Fels and Andrew Balls of Pacific Investment Management Co. expect growth to slow to about 1% in the first half of 2020.“While a recession is not our base case, it doesn’t take much to tip over an economy that is moving along at stall speed,” Fels and Balls wrote in the report last week.While a slower stall speed means the economy can expand at a more subdued pace without signaling imminent recession, the bad news is that it doesn’t mean the U.S. is less exposed to a downturn.Lower potential growth “tells you that a shock that we may have experienced before the crisis which may not have tipped you into recession could certainly do so now,” said Matthew Luzzetti, chief U.S. economist at Deutsche Bank AG.As economic growth withers, fiscal and monetary stimulus, provided that they are employed in a timely fashion, can give the economy much-needed lift. But policy makers at the Fed and in Congress have less room to keep the nation from hitting stall speed -- or possibly accelerating out of it.“It raises the risk of the end of the economic cycle,” Gapen said. “We’ve done what we can do on the fiscal side. There’s limited space for monetary policy to react.”(Adds employment data from ADP in tenth paragraph.)To contact the reporter on this story: Reade Pickert in Washington at email@example.comTo contact the editors responsible for this story: Scott Lanman at firstname.lastname@example.org, Vince Golle, Margaret CollinsFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- Oil fell to the lowest in almost two months as negative economic signals darkened the outlook for global energy demand.Futures dropped 0.8% in New York on Tuesday. Manufacturing in the world’s largest economy has slumped and the World Trade Organization cut its forecast for commerce to a decade low. The bleak economic picture contrasted with a plunge in OPEC crude output last month driven almost entirely by crippling attacks on Saudi Arabian oil installations.“Demand fears are overriding supply fears,” Phil Flynn, senior market analyst at Price Futures Group Inc., said by telephone.Stocks fell and Treasuries rose as investors fled riskier assets including commodities and equities. Traders’ attention has turned to the U.S.-China trade war and its implications for global energy demand. High-level talks between the world’s two largest economies are expected to take place within weeks.West Texas Intermediate for November delivery fell 45 cents to settle at $53.62 a barrel on the New York Mercantile Exchange, the lowest close since Aug. 8.The U.S. benchmark has fallen 15% since reaching $62.90 on the first trading day after the Sept. 14 attacks that devastated Saudi oil output. In the meantime, the kingdom has surprised many observers with the swift pace of repairs and restoration.Brent for December settlement fell 36 cents to close at $58.89 on the ICE Futures Europe Exchange. The global benchmark crude traded at a $5.39 premium to WTI for the same month.Asian manufacturing sentiment remained mostly bleak in September due to the trade conflict and waning demand. The euro area’s manufacturing sector slumped last month.In the U.S., the Institute for Supply Management’s factory index slipped to 47.8 in September, the lowest since June 2009. The figure missed all estimates in a Bloomberg survey that had called for an increase from August’s 49.1.“In view of subdued global economic prospects and rising U.S. oil production, any concerns” about oil supply tightening have evaporated, said Carsten Fritsch, an analyst at Commerzbank AG in Frankfurt.\--With assistance from Grant Smith and Sharon Cho.To contact the reporters on this story: Robert Tuttle in Calgary at email@example.com;Jacquelyn Melinek in New York at firstname.lastname@example.orgTo contact the editors responsible for this story: David Marino at email@example.com, Joe Carroll, Mike JeffersFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Frankfurt is poised to be Europe's biggest beneficiary from Britain's departure from the European Union, but job creation in Germany will fall short of initial estimates, according to a bank study published on Tuesday. Helaba Chief Economist Gertrud Traud said 3,500 banker jobs would be created in Frankfurt by the end of 2021. While Frankfurt has been chosen by 31 foreign banks from 14 different countries as their post-Brexit location, Paris attracted 11, Dublin 9, Luxembourg eight and Amsterdam five banks, according to the Helaba study.
(Bloomberg) -- A second activist investor has built a position in Aareal Bank AG and plans to support a full sale of the German real estate lender’s software business.Petrus Advisers Ltd. owns just over 2% of Aareal Bank, the London-based investment firm’s founder, Klaus Umek, said by phone Tuesday.“We think the software unit should be sold -- there’s more potential in there,” Umek said.Aareal Bank is currently working on a sale of as much as 30% of its software and services division Aareon, people with knowledge of the matter said in July. After Bloomberg News reported the stake sale plans, activist hedge fund Teleios Capital Partners called on the bank to sell the entire business. Analysts have valued the unit at about 550 million euros ($599 milllion).German banks are streamlining businesses under pressure in an overcrowded market where lenders are grappling with negative interest rates. Selling the software division could help Aareal to deal with difficulties in its U.K. operations, where non-performing loans for shopping centers have been piling up.Shares of Aareal Bank have risen 2% this year, giving the company a market value of about 1.65 billion euros. A spokesman for Aareal Bank declined to comment.Activists have been stepping up pressure on European banks. Petrus said last week it has increased its holding in Commerzbank AG’s listed online subsidiary, Comdirect Bank AG, to just over 3%. Cevian Capital revealed a stake in Finland-based lender Nordea Bank Abp in December. Investor Edward Bramson’s Sherborne Investors Management LP became one of the biggest Barclays Plc shareholders last year and has slammed the new chairman’s strategy.\--With assistance from Scott Deveau.To contact the reporters on this story: Jan-Henrik Förster in London at firstname.lastname@example.org;Matthias Wabl in Vienna at email@example.comTo contact the editors responsible for this story: Dinesh Nair at firstname.lastname@example.org, Ben Scent, Matthew MonksFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Reach them on Messenger to share your thoughts on market moves: email@example.com and firstname.lastname@example.org THROW AWAY YOUR WALLET: DIGITAL CURRENCY BY CEN BANKS SOON? "The central banks are probably going to have to make some move within the next two to three years, after all Facebook has put pressure by suggesting they could launch in the coming year. Earlier today, the Swiss National Bank's Governing Board Member Thomas Moser said he wouldn't be surprised to see a first central bank issue its own digital currency within the next year.
Reach them on Messenger to share your thoughts on market moves: email@example.com and firstname.lastname@example.org BEWARE THE RISE OF JUNK BONDS (1343 GMT) More European and U.S. companies are taking advantage of low interest rates to issue debt with junk ratings, raising concerns about the vulnerability of the market in the event of an economic downturn, according S&P Global Ratings Research. The proportion of speculative-grade issuers rated 'B-' in both the U.S. and Europe has risen markedly since 2017, hitting an all-time high of 20.5% in the second quarter in the United States, S&P said. With low interest rates, companies have rushed to take on more debt, predominantly in a handful of sectors.
The recent flash PMI numbers have only confirmed that Germany is very likely slipping into recession as it continues to get crushed between the trade war and Brexit hitting the manufacturing-heavy economy. "We think investors should use the September equity rebound and bond market sell-off as a chance to reduce some risk, until the economic and political concerns that confront growth-sensitive assets fade or valuations become more attractive," Barclays' Ajay Rajadhyaksha says.
(Bloomberg) -- Terms of Trade is a daily newsletter that untangles a world embroiled in trade wars. Sign up here. The outlook for the euro-area economy has taken another hit, with confidence in industry dropping to its lowest in six years in a sign that the impact of uncertainty from trade tensions and Brexit is getting worse.A downturn centered on manufacturing is weighing heavily on the region, with Germany on the brink of recession and most major economies recording slower growth. The latest European Commission survey highlights the damage, with industry managers more worried about demand from customers and showing less enthusiasm for hiring.The decline dragged an overall measure of euro-area sentiment down more than economists had forecast in September, to its weakest reading since early 2015.The euro, which has fallen almost 4% in the past three months, was little changed at $1.0924 as of 11:35 a.m. Frankfurt time.Manufacturing across the euro area, and particularly in Germany, has been hammered by a cocktail of uncertainty stemming from trade tensions between China and the U.S., and negotiations over the pending exit of the U.K. from the European Union.The slowdown has already prompted a response from the European Central Bank. It cut interest rates this month and announced a new round of asset purchases, joining a global wave of monetary easing.The commission said industry managers were “markedly more pessimistic” on all fronts in September, including production expectations and order books.Services, which has so far proved more resilient, showed a slight improvement in confidence. Still, that figure remains near its lowest level since mid-2015. Consumers were also less gloomy.Recent weeks have been marked by even greater uncertainty radiating from the U.K. over Brexit. Spain’s acting Prime Minister Pedro Sanchez said in an interview this week with Bloomberg News that a no-deal scenario was the biggest threat to Spanish economic growth.Reflecting the malaise, British Airways owner IAG SA warned this week that the challenges facing the European airline industry, including the weaker economy, will continue into 2020.Germany’s Commerzbank AG on Friday cut its revenue outlook because of woes in the corporate client business in particular. “Over the course of 2019, the market environment has continued to deteriorate,” it said.“It is not in the baseline to have a recession,” incoming European Central Bank President Christine Lagarde told Bloomberg Television, when asked about the euro zone. “That said, it’s mediocre growth, it’s at risk because of essentially one major threat, which is the trade war that we see developing or brewing and the uncertainty it generates for investors.”\--With assistance from Kristian Siedenburg.To contact the reporter on this story: Jeannette Neumann in Madrid at email@example.comTo contact the editors responsible for this story: Fergal O'Brien at firstname.lastname@example.org, David GoodmanFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Welcome to the home for real-time coverage of European equity markets brought to you by Reuters stocks reporters and anchored today by Josephine Mason and Joice Alves. Europe's stock futures are making tentative gains in early deals, shrugging off for now pressure overnight in Asia and on Wall Street amid worries over the impact of the impeachment process on the world's top economy as investors draw comfort from reports Washington and Beijing will meet for the next round of trade talks in a few weeks. Dark clouds are looming though with a profit warning from U.S. chipmaker Micron overnight renewing concerns about demand from smartphone makers and after reports that the United States may reinstate curbs on American companies supplying China's Huawei, one of the world's top smartphone markets.
Welcome to the home for real-time coverage of European equity markets brought to you by Reuters stocks reporters and anchored today by Josephine Mason and Joice Alves. For a Friday, it's relatively busy on the corporate news front, but the main focus for investors will likely be chipmakers after Micron's warning overnight which will underscore worries about the health of smartphone demand amid tensions between the United States and China. Italian oil and gas group Eni will be in focus after news its chief executive, Claudio Descalzi, was under investigation for a conflict of interest issue over dealings in the Congo.
Commerzbank may have to keep the Swiss franc mortgage portfolio of mBank when it disposes of its stake in the Polish bank, Poland's market regulator KNF said on Wednesday. "It is natural for the supervisor to expect that an entity intending to leave the Polish market will properly secure both the financing of the portfolio of foreign currency loans and the legal position of borrowers," KNF head Jacek Jastrzebski said in an email to Reuters. Commerzbank said last week it aims to sell a stake in mBank, in which it has a 69.3% holding worth about $2.56 billion.
Shares in mBank hit their highest level since early August on Tuesday, partly in response to speculation that Poland's fourth largest lender by assets is up for sale. Last week, Commerzbank , partly owned by the German government after a bailout and struggling to generate profits, said it aims to sell a stake in mBank in which it has a 69.3% shareholding worth about $2.56 billion (2 billion pounds). "I expect there will be a significant interest in mBank.
(Bloomberg Opinion) -- Commerzbank AG, Germany’s second-biggest publicly traded bank, has just unveiled a strategic overhaul that is supposed to secure its future as a standalone company. But even if everything goes well, its new “Commerzbank 5.0” plan foresees meager profitability at best.Weakened by fierce domestic competition, bloated costs and a squeeze on margins from negative central bank interest rates, Commerzbank explored a combination with its larger rival Deutsche Bank AG earlier this year. Its response to that deal’s failure is a painful reminder that its returns aren’t going to improve in a fragmented German market dominated by smaller savings and cooperative lenders.As part of Chief Executive Officer Martin Zielke’s revamp, Commerzbank plans to cut about 20% of its branches and 5% of its workforce, costing the company about 850 million euros ($934 million). That leaves it with 750 million euros to invest in technology to help the state-owned lender try to win more business from small- and medium-sized companies.To fund the reorganization, Commerzbank hopes to sell a majority stake in its Polish unit, thereby increasing its dependence on the German market. Moody's warned the sale would be bad for Commerzbank’s revenue and profit growth.What’s more, the plan stops well short of offering much hope of sustainable profitability once it’s completed. Missing from its aspirations was a sense for how much the lender might grow. Revenue should be higher by 2023, the bank said, without providing details. That’s a sign that growth will remain elusive.And while Commerzbank was a little bolder in how much it can cut from its expenses (costs should decline by about 20% by 2023), investors may hardly notice the difference. In the medium term, profitability may reach an uninspiring 4% when measured by return on tangible equity. That is substantially below estimates of its cost of equity, the nominal toll extracted by investors in exchange for holding the shares.The best that can said is that Commerzbank is being realistic — depressingly so. More details on the overhaul and the assumptions behind those underwhelming financial targets are due on Friday after the board gives its approval.It turns out many other German banks are still being too optimistic about their profitability, with more than half of the 1,400 or so smaller lenders expecting interest rates to rise according to a recent survey by the country’s finance regulators. Good luck waiting for that.There were a number of problems with combining Commerzbank and Deutsche Bank: The deal would have left them with an inefficient securities unit, while requiring tens of thousands of politically difficult job cuts to make the numbers work.Yet with interest rates falling lower and lower and the German economy suffering its worst slump in seven years, the need for domestic bank consolidation is as pressing as ever. Loan losses will probably get worse and, though smaller lenders have “sound capital” under various stress tests according to the BaFin regulator and the Bundesbank, competition will get tougher in the current rate environment.About 1,500 lenders are vying for business in Germany, the lowest concentration in European banking. Public sector savings banks and their associated Landesbanks make up about 25% of the country’s banking total assets, while cooperatives account for another 11%. That leaves the top five institutions with just 30%. As a result, the German banks’ return on equity has trailed the rest of Europe. Forcing cooperatives to become corporations might be one way of kickstarting consolidation, according to Peter Hahn of the London Institute of Banking & Finance.Commerzbank’s easiest way out might be to sell out to one of the European suitors that have knocked on its door. That won’t solve Germany’s overbanked industry, though.To contact the author of this story: Elisa Martinuzzi at email@example.comTo contact the editor responsible for this story: James Boxell at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of the editorial board or 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/opinion©2019 Bloomberg L.P.
Euro zone stock markets clocked their worst day in one month on Monday after dismal business activity readings from across the currency bloc deepened fears of a looming recession and suggested more stimulus was required. After logging five straight weeks of gains, euro zone stocks slipped 1% as surveys showed growth in services and manufacturing in the region stalled in September.
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