Commerzbank seeks 23.2 bn euro bailout

Commerzbank, the second-biggest German bank, took the plunge and said today it would ask the government for 8.2 bn euro in cash and 15 bn more in debt guarantees.     

Commerzbank also posted a third-quarter net loss of 285 million euro and an operating loss of 475 million euro.      T

he international financial crisis cost the bank 1.1 bn euros in losses from market operations, the statement added.     

Shares in the bank nonetheless shot up in early Frankfurt trading, gaining 7.41 % to 9.06 euro while the DAX index of German blue-chips showed a gain of 1.50% overall.     

At the close on Friday, Commerzbank shares traded for 8.43 euro, having lost more than two-thirds, or 67.44 %, of their value since the beginning of the year.     

Commerzbank responded to pressure from German authorities for banks to apply for aid under a rescue package that includes up to 80 billion euros in capital injections and 400 bn in loan guarantees.     

The capital infusion will take the form of a "silent participation," which means Berlin will not become an active shareholder in Commerzbank, and the cash will go directly towards boosting the bank's so-called Tier1, or core capital.     

That means investors' holdings will not be diluted in Commerzbank, which can also use a capital increase as it is acquiring Dresdner Bank, the third biggest private German bank from the insurance group Allianz.