Deutsche Bank and Commerzbank shares dropped sharply on Tuesday after an investor sold stakes of more than 5 per cent in each of Germany’s top two lenders, worth a combined €1.75bn.
Capital Group, Deutsche’s second-largest shareholder, was the seller behind a block transaction of €1.27bn of the bank’s stock on Monday, according to people familiar with the matter.
There was a simultaneous €475mn sale of Commerzbank shares, according to Bloomberg data, but the seller remains unknown.
Shares in the two banks fell more than 10 per cent in morning trading.
The latest exit by a leading investor is another blow for Germany’s largest lender after US private equity group Cerberus started to unwind its ill-fated five-year bet on Deutsche’s nascent turnround in January. Cerberus also sold down its stake in Commerzbank at the same time.
Capital sold a £900mn stake in Barclays last month, indicating that the $2.7tn US investment giant has soured on the prospects for the European banking system. Capital declined to comment.
Capital was also the top shareholder, as of January, in both France’s Société Générale, with 7.8 per cent, and Italy’s UniCredit, with 6.4 per cent, according to Capital IQ data.
Shares in both Deutsche and Commerzbank had been tentatively recovering after a bleak run of lossmaking years, regulatory fines and market share decline. The pair explored a merger in 2019, but abandoned the effort and embarked on costly restructuring programmes.
However, with interest rates set to rise less than forecast as inflation snowballs and the war in Ukraine and coronavirus pandemic disrupt global supply chains, sentiment on European banks has softened recently.
For years, the region’s banks have been far less profitable than their peers in the US and across Asia, hamstrung by fragmented markets, under-investment in technology and legacy misconduct issues.
“We remain confident in our strategy,” Deutsche said in a statement. “Our focused business model and risk management capabilities have proven their resilience in challenging times . . . we have had a promising start into the year and our objectives remain unchanged.”
By the afternoon in Frankfurt, Deutsche had recovered slightly to trade 8.5 per cent lower, while Commerzbank was down 7.8 per cent, eliminating most of their gains so far this year.
Commerzbank said in a statement that “a share sale does not have any implication for our strategy” and its business model and risk management “have proved themselves in challenging times”.
It added that the bank had raised its financial targets last month after a “promising start” to the year.
Additional reporting by Harriet Agnew