US asset manager Capital Group is doubling down on its bet on a recovery of Germany’s ailing banking sector and has built a 4.8 per cent stake in Commerzbank just weeks after becoming one of Deutsche Bank’s largest shareholders.
The stake in Commerzbank, which has a market value of about €330m based on Thursday’s closing share price, turned Capital Group into the lender’s fourth largest shareholder after the German government, private equity group Cerberus and BlackRock.
It follows Capital Group’s disclosure earlier this month of a 3.1 per cent stake in Deutsche Bank — widely regarded as an important vote of confidence in a turnround at Germany’s struggling largest lender.
“The investments could be a boost of energy for the German banking sector,” said Jan Pieter Krahnen, professor of finance at Frankfurt University.
Large investors stand a better chance of lobbying effectively for more radical change, he added. “This is good news for a sector which has been treading water for too long.”
Both Deutsche and Commerzbank are suffering from bloated costs, tepid revenue growth and negative interest rates. Despite continuous restructuring efforts, they each lost more than half of their stock market value over the past five years and trade at just 0.3 times their book value.
Capital Group — one of the oldest and largest US asset managers with close to $2tn of assets under management — is the second big US investor after Cerberus to build parallel stakes in both German lenders. In 2017 Cerberus acquired a 3 per cent position in Deutsche and bought 5 per cent of Commerzbank.
In 2018 Cerberus was one of the key advocates of an attempted tie-up between the two banks, which eventually fell apart. Last year, the private equity group called for Deutsche chairman Paul Achleitner to be replaced. Mr Achleitner, who remains chairman, has held the position since 2012 and overseen the lender’s decline since then.
Back in September, Commerzbank announced plans to cull 2,300 jobs and close a fifth of its branches — later criticised by investors and the European Central Bank as not ambitious enough. The bank’s new chief financial officer Astrid Orlopp said in mid-February that the lender was going to “look everywhere” for a fresh round of cost cuts.
Shares in Commerzbank jumped briefly on Friday after its new investor emerged but were down 5 per cent early afternoon in Frankfurt amid a global sell-off.
Commerzbank and Capital Group declined to comment.