December 2003
Commerzbank pulls off an unlikely trick
Issuer: Commerzbank
Size: e760 million
Bookrunners: Commerzbank Securities, Morgan Stanley
Date: November 12 2003
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Commerzbank share price
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Source: Reuters |
By simultaneously announcing a
disastrous set of results and successfully raising substantial
straight equity capital on November 12, Commerzbank pulled off a
trick that would barely have been conceivable six months ago for
almost any issuer, let alone a German bank.
The results included a
€2.05 billion pre-tax
loss for the first nine months of 2003 and an unexpected
€2.3 billion
write-down. The write-down comes mainly from the falling value of
large stakes in mortgage bank Eurohypo and fund manager Jupiter but
importantly is not credit related.
The substantial goodwill reductions included in the
write-down reduced core capital by
€2 billion, taking the
tier-one ratio down to 6.4% from 7.7%, necessitating the capital
increase.
Third-quarter results were weak on other fronts too.
Commerzbank reported a core operating loss...
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