When someone like Cerberus invests, the financial world pays attention. However, also when it comes to selling again. The US fund is one of the most aggressive and successful financial investors in the world: Founded in 1992 by Stephen Feinberg, it supported Donald Trump at times with a lot of donations. The fact that the fund is known after the hellhound of Greek mythology is intended to underline the aura of invincibility. In this respect, caused a sensation on Tuesday that Cerberus is now gradually – and probably at a loss – parting with its shares in Commerzbank and Deutsche Bank. Prices had risen sharply at the beginning of the year in the hope of rising key interest rates, and apparently this was a welcome occasion for Cerberus to implement the sales plans, which had reportedly been smoldering for some time.
Within a few hours, Cerberus placed parts of the share packages with professional investors on Monday evening, which brought the US fund 443 million euros and reduced its Deutsche Bank stake to two percent and that in Commerzbank to three percent. That should not be the last step, because, according to agency reports, Cerberus only set itself a period of 45 days, during which it does not want to throw any further blocks of shares from either bank on the market. Holding periods of at least three months are normal.
In 2017, the fund was attracted by the apparently low share prices of German banks and had invested at least five and three percent in Commerzbank and Deutsche Bank – it was part of a massive bet on the recovery of the ailing German banking market, flanked by numerous good weather – Appointments with the federal government. The whole thing was unusual from the start, also because financial investors usually prefer to take over majorities in companies so that they can govern. Cerberus had not only invested in large institutes, but also in the Landesbank HSH Nordbank. At that time, the fund invested roughly EUR 1.5 billion in the “Germany bet”, a lot of money also for Cerberus.
Another attempt to merge the two banks is probably off the table for good
On the one hand, this was based on the hope that key interest rates would soon rise again and that banks would be able to make money more easily in the lending business. It was also not rocket science to trim German banks for efficiency, said a Cerberus manager at the time analogously said. Last but not least, the fund wanted to encourage a merger between Deutsche Bank and Commerzbank, with the support of the federal government. Both financial institutions broke off corresponding discussions in 2019 after a short time.
However, Cerberus apparently no longer wants to wait for the interest rate turnaround that is actually becoming apparent, nor for the ongoing restructuring of both banks to work out at some point. In any case, the banking adventure has not turned into big business for the hellhound. In any case, Cerberus sold the shares on Monday evening 20 and 30 percent below the respective entry price – even though the fund had interfered in day-to-day business at times. Cerberus forced Deutsche Bank to enter into an expensive consultancy contract, and Commerzbank continued to write critical letters until the then CEO Martin Zielke and his supervisory board chairman dropped in annoyance in 2020. Zielke’s successor Manfred Knof recently emphasized that Cerberus was behind his savings and renovation plans. In the fall it had Handelsblatt reported, Cerberus even wants to increase and take over the federal government’s 15 percent stake in Commerzbank. There is no longer any question of that. A new attempt by both houses to merge should also be finally off the table. Neither Cerberus nor Deutsche Bank and Commerzbank wanted to comment.
At least with a view to the stock exchange price, both banks coped with the news well: Both stocks only fell slightly on Tuesday. And the bottom line is that the trip to the German banking market could have been worth it for Cerberus: HSH Nordbank, for example, got Feinberg and his people for free thanks to a complicated side business, including equity and billions of national guarantees. It was the first privatization of a Landesbank in Germany. Under the then Mayor of Hamburg, Olaf Scholz, Hamburg and Schleswig-Holstein never seriously calculated what would have cost to do it themselves. At the time they were just happy to be rid of HSH. The hellhound will have been happy.