Commerzbank AG (CBK) and Intesa Sanpaolo SpA (ISP), the number-two banks in Germany and Italy, respectively, plan to raise ¤13.25 billion ($19 billion), joining lenders tapping investors in the aftermath of the global financial crisis.
Commerzbank, based in Frankfurt, aimed to raise ¤8.25 billion from investors as part of a plan to repay about ¤14.3 billion in state aid. Intesa intended to sell as much as ¤5-billion new shares by July to bolster reserves, the Milan-based lender said in a statement today.
Banks from Italy to Denmark to Spain are increasing reserves as regulators tighten capital requirements. Commerzbank and Intesa led bank stocks higher in Europe, and the cost of insuring European financial bonds dropped to the lowest in five months on optimism the offerings would help banks pass stress tests and stem contagion from Europe’s sovereign debt crisis.
“Investors are relieved as the uncertainty seems to be over for now,” said Peter Braendle, a fund manager at Swisscanto Asset Management AG in Zurich, which oversees about $62 billion. “Everybody was waiting for this. There seems to be demand in the market, so there should not be a problem for banks to raise new capital.”
Intesa climbed 6 per cent to ¤2.26 by 4:44 pm in Milan trading, for a market value of ¤28.6 billion. Commerzbank jumped 3 per cent to ¤5.77 in Frankfurt trading, bringing its market value to ¤7.7 billion.
Spanish banks
Credit-default swaps on Commerzbank’s subordinated debt fell 43 basis points to 272, the lowest since November, according to CMA. That helped drive the Markit iTraxx Financial Index linked to the junior bonds of 25 banks and insurers down 25.5 basis points to 205.5 at 3:30 pm in London.
New rules from the Basel Committee on Banking Supervision would require banks to more than double the reserves they hold by 2019. Financial companies in Europe, West Asia and Africa may raise as much as $90 billion this year from equity sales, compared with $70.6 billion last year, according to a February estimate by Bank of America Corp.
In Spain, where savings banks are racing to raise funds to meet capital requirements imposed by the government before a September deadline, a group led by Caja Madrid said today it planned to offload riskier assets like foreclosed land into a bad bank before an initial public offer. The IPO of the entity, known as Bankia, was planned for “coming months”, Chairman Rodrigo Rato said in Madrid. The Bank of Spain told 12 lenders they needed a combined ¤15.2 billion euros to meet minimum capital standards.
Danske, Deutsche
Danske Bank A/S, Denmark’s largest lender, raised 19.8 billion kroner ($3.8 billion) by selling new shares, the Copenhagen-based company said today, as it increased capital before new international rules.
Deutsche Bank AG, Germany’s biggest bank, completed a record ¤10.2-billion share sale in October to fund the takeover of Deutsche Postbank AG and bolster reserves. CEO Josef Ackermann ruled out an additional fundraising for the lender on April 1, saying his bank was already “well capitalised.”
Deutsche Bank will seek shareholder approval at the annual general meeting on May 26 for authority to sell 450 million new shares, according to the agenda for the AGM published yesterday. Based on yesterday’s closing share price of ¤41.90, and excluding any discount, Deutsche Bank could raise as much as ¤18.9 billion.
Commerzbank planned to repay about ¤14.3 billion in state aid by June through the proceeds of the stock sale and with excess capital. Germany’s bank-rescue fund, Soffin, would convert silent participations into ¤2.75-billion shares, the lender said in a statement today. The bank would also redeem silent participations of ¤3.27 billion euros with excess regulatory capital, it said.
