Commerzbank Eyes Europhypo | Business| Economy and finance news from a German perspective | DW | 16.11.2005
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Commerzbank Eyes Europhypo

Commerzbank, the third-biggest bank in Germany, is planning a capital increase to help finance its planned purchase of Eurohypo, Europe's leading real estate financier, according to reports.


Commerzbank already owns part of Eurohypo

On Tuesday, Commerzbank had said that it was negotiating to buy out rivals Deutsche Bank and Dresdner Bank in Eurohypo, which is a three-way joint venture.

Commerzbank hopes to get its hands on the other two banks' combined stake of 66.2 percent -- worth an estimated 5.8 billion euros ($6.8 billion) -- to raise its own holding in Eurohypo

to more than 98 percent.

But it hoped to pay substantially less than the market price for those stakes, with sources saying the deal would cost Commerzbank around 4.55 billion euros.

Financial daily Börse n -Zeitu n g reported the bank itself would shoulder a big chunk of the purchase price of about 1.8 billion euros, with 800 million euros coming from the sale of its 2.9-percent stake in Italian bank Banca Intesa.

Further sales?

A separate report in the Fi n a n cial Times Deutschla n d suggested that Commerzbank could also sell other shareholdings to put some of the money, including a 14.6-percent stake in Korean Exchange Bank and a 4-percent stake in heavy industry giant ThyssenKrupp.

By contrast, Commerzbank had no intention of selling its 10-percent stake in German engineering conglomerate Linde, FT Deutschla n d quoted a bank spokesman as saying.

The remainder would be financed via a 1.3-billion capital increase and a 1.5-billion-euro issue of hybrid capital. Hybrid securities have characteristics of both bonds and shares.

Commerzbank declined to comment on the report.

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