STOCK MARKET WATCH -- Wednesday, 25 January 2012

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44. Commerzbank Seeks To Avoid Nationalization

http://www.spiegel.de/international/business/0,1518,809332,00.html

German bank Commerzbank is exploring possible tricks it can use to avoid having to turn to the state for aid. Time is running out for the bank, too, with Jan. 20 set as the deadline for European banks to submit plans to the European Banking Authority for how they will improve their cash on hand in order to meet stringent new capital requirements aimed at ensuring the banks can survive if euro-zone countries go bankrupt. Among the measures being considered by Commerzbank are remunerating staff in part through company stock and reducing its lending to other businesses.

In order to prevent a government handout from Finance Minister Wolfgang Schäuble and further nationalization, Commerzbank, which is Germany's second largest private bank, needs to increase its capital level by €5.3 billion ($6.7 billion).

During the Lehman crisis, the bank had to be saved using taxpayer money, with the German state acquiring 25 percent of the bank. To avoid a repeat, Chief Executive Martin Blessing's bankers are calculating models that would enable the bank to prevent nationalization.

A tidy sum could be generated if, for example, employees would accept a variable part of their salary in the form of Commerzbank stock -- a proposal that is being discussed seriously by the board. In 2010, the company paid out €437 million in salaries, but that figure could be significantly lower this year.