Posted by: Dirk | January 10, 2009

Saving Kommerz – the first bank bail-out in Germany

Commerzbank was bailed out this week by the government providing €10 bn at the going share price of €6 per share. The price has fallen since and probably could have been lower. Also, €8.2 bn come as a silent participation. However, with the share in Commerzbank now at 25 percent the government has a blocking minority and will send two people to the board.*

The German plan looks unfavorable compared to that of the UK, for instance. In the UK, the government gets preferences share in return for extra capital. Also, banks were forced to take on a minimum of 25 bn pounds each.

* I retired this post temporarily to make sure I get the information correct. The sentence ending with the star was not included in the original post.


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