The appointment calendars seem well filled, there has not yet been a meeting between the new Federal Finance Minister Christian Lindner (FDP) and Manfred Knof, who has been running Commerzbank for a year and this Thursday reported on his first calendar year at the head of the bank. Certainly, however, such a meeting will soon be arranged: the new federal government, as many observers in the banking world expect, will probably not take too much time if they really want to part with their stake in Commerzbank at some point. While Lufthansa, for example, has already shaken off the state stake from the corona crisis, the federal government has been involved in Commerzbank since the financial crisis more than ten years ago – the hope of ending the investment without losing billions has long since evaporated, but it has so far nobody has dared to approach the topic.
It could be easier for the new federal government: Neither the FDP nor the Greens had anything to do with the rescue of Commerzbank in 2009, nor with the hitherto rather contradictory attempts to influence the bank’s strategy. Whoever solves the problem now, regardless of the loss, can still blame it on the predecessors. “In the long run, the state will not be a shareholder in Commerzbank,” Lindner said this week Handelsblatt, but to signal straight away that this will not happen at any price. When “decisions are to be made in the future”, he will keep an eye on both the taxpayers’ financial interests and the importance of Commerzbank for medium-sized businesses.
Protection against hostile takeover
But does Commerzbank still need the federal government as a major shareholder? The financial institution should now be stable enough, which means that the protective hand of the state is no longer necessary in the opinion of many experts. In the years since the financial crisis, it has at times done more harm than good. Especially since the federal government saved German medium-sized companies and their commercial banks from collapsing in the corona crisis with almost 60 billion euros in aid loans. Now, however, Commerzbank is also helped by the forthcoming turnaround in interest rates. Higher interest rates usually make at least the classic lending business more profitable. The ongoing corporate restructuring – the umpteenth in recent years – and most recently initiated by Knof, could now possibly even be successful. In any case, the bank recently managed to cut costs without losing an excessive number of customers and income.
Last year, the institute made a net profit of 430 million euros – despite special charges of almost two billion euros for severance payments and other restructuring costs. Like almost all large banks, Corona has also given Commerzbank a surprising special boom: Customers traded securities more often, and at the same time demand for loans increased. For 2022, Knof promised a jump in profits. In addition, the money house wants to pay dividends again, which has only been achieved in two years since the financial crisis. The shareholders were also pleased: the price rose by almost six percent on Thursday to just under nine euros. Since Knof took office, the titles have recovered significantly.
If the state wanted to end its commitment without losses, a price of 26 euros per share would be necessary. At the current value, the federal government would still realize a loss of around 2.4 billion euros. Knof may therefore be hoping that the federal government will remain committed a little longer, liberal attitude or not. In any case, he avoided the question of whether Commerzbank could not live well without the federal government. Volker Brühl, Managing Director of the Center for Financial Studies at Frankfurt’s Goethe University, can explain this well: “In any case, the participation of the federal government has a positive influence on the rating”. In other words: Thanks to the creditworthiness of the state, Commerzbank can refinance itself more cheaply on the capital market.
Exodus of Commerzbank managers
Of course, the federal participation also protects against a takeover by a foreign bank, which is probably not in the interests of the management. “A sale of the federal government’s stake should be used to promote European consolidation in the banking sector,” said Brühl. So far, however, Commerzbank would at best be a junior partner in a merger and the board members would probably lose their jobs. “We stand up every day to ensure that Commerzbank remains independent,” said Knof, and customers supposedly expected that too. “They cheer us on and keep telling us we need you.”
However, not everyone on the board is going along with it: With HR director Sabine Schmittroth, another manager is leaving the financial house after numerous other departures. There is now only one woman on the top management board. Knof wants to align the bank with sustainability, which also includes the topic of diversity, but so far he has not only made progress. the Stock exchanges newspaper, rather not known as the central organ of feminism, even wrote this week about an “exodus of Commerzbank managers” and warned that the bank “must prevent investors who are oriented towards sustainability from turning away from it because of diversity deficits”. But Knof doesn’t mind that. Around 34 percent of all management positions are currently occupied by women, and in the future it should be 40 percent. Apparently he is in no hurry: the target is 2030.