Commerzbank, Germany’s second-largest bank by assets, is expected to wind down rather than sell its troubled property lending arm Eurohypo following an agreement with the European Commission.
Commerzbank, Germany’s second-largest bank by assets, is expected to wind down rather than sell its troubled property lending arm Eurohypo following an agreement with the European Commission.
EU competition commissioner Joaquín Almunia said on Wednesday that the Commission has ‘reached an agreement with Commerzbank and the German authorities. This is very positive'.
Both Almunia and Commerzbank are expected to release a statement on Friday outlining details of Eurohypo's break-up and eventual winding down. A Commerzbank spokesman told PropertyEU that there would be no further comment before Friday.
Commerzbank agreed back in 2009 that it would sell Eurohypo by 2015 in return for state-handouts received during the financial crisis. Initially, Commerzbank had hoped to sell its property lending arm but it has struggled to find a buyer. Eurohypo was once one of the most active property lenders in Europe.
In October last year, Eurohypo announced that it would temporarily suspend all new business until June 2012, a move which sent shock waves rippling through the sector. Commerzbank said at the time that the move was in response to new demands by the European Banking Authority that stipulate that European banks need to increase their Tier 1 capital to 9% by June - or collectively find more than EUR 100 bn in extra capital.
