Commerzbank sees bleak 2013 as it fishes for investors

Tue May 7, 2013 7:25am EDT
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By Arno Schuetze

FRANKFURT (Reuters) - Commerzbank CBKGk.DE, Germany's No.2 lender, will have to work hard to entice investors to its 2.5 billion euro ($3.3 billion) share call this month after painting a bleak outlook for the rest of this year.

Chief Financial Officer Stephan Engels said 2013 would be a year of transition for the bank, which posted a net loss of 94 million euros in the first three months as it booked a 493 million euro restructuring charge linked to 4-6,000 job cuts.

"Revenues will stay under pressure, costs are expected to increase," Engels said on Tuesday, adding the bank hoped to see positive effects from its revamp next year.

A source with knowledge of the bank's capital increase said Commerzbank may therefore have to offer new shares at a hefty discount of about 50 percent. The source also said Commerzbank could knock at least 35 percent off the theoretical ex-rights price of the new shares, implying that these may be sold at around 5.50 euros apiece.

"Commerzbank will need a lot of persuasive power to enthuse investors to buy the new Commerzbank shares," said Felix Scherhaufer from LBBW Asset Management.

Commerzbank shares rose 1.8 percent by 1117 GMT, as analysts pointed to slightly better-than-expected quarterly earnings. They had expected a loss of 125 million.

However, investors criticized the bleak outlook.

"The better first quarter results so far give no hint of a fundamentally better business development in 2013," said Lutz Wockel from fund manager NordLB Capital Management.   Continued...

A media representative operates a TV camera during Germany's Commerzbank annual shareholder's meeting in Frankfurt, April 19, 2013. REUTERS/Lisi Niesner