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Commerzbank shares soar on rumours of a government sell-off

Shares in Germany's second-largest lender Commerzbank leapt Thursday as rumours that the government might soon sell off its stake set financial circles abuzz.

Commerzbank shares soar on rumours of a government sell-off
Photo: DPA

The bank's stock briefly added more than 5.0 percent before falling back to gains of 3.65 percent by 0930 GMT, trading at €11.23 and topping the DAX index of blue-chip German shares.

Banking shares across Europe have benefited from the US Federal Reserve's slight tightening of monetary policy Wednesday, but Commerzbank has gained an additional boost from two days of rumours about its future.

A spokesman for Germany's finance ministry told journalists Wednesday the federal government would not hang on to its 15.6-percent stake in the lender – the legacy of a rescue during the financial crisis – forever.

But he added that “we want to achieve a good result for German taxpayers,” a far-off prospect as the value of Berlin's holdings remains well below the €5.1 billion it originally paid.

A financial source familiar with the matter suggested the government might have aimed to jolt some life into Commerzbank's valuation.

“Considerations are still in early stages… we do not expect a large move regarding the Commerzbank ownership in a short time period,” ING bank analysts commented.

German business magazine WirtschaftsWoche meanwhile reported Thursday that Berlin favours a future tie-up between Commerzbank and France's BNP Paribas, citing anonymous political and financial sources.

Shares in the French bank gained 1.8 percent to trade at €67.13 in Paris.

BNP declined to comment on the rumours when contacted by AFP.

The French lender is not the only rumoured Commerzbank suitor, with media reports that Italy's UniCredit had expressed interest to Berlin driving up the shares on Wednesday.

Repeatedly the subject of merger or takeover speculation, Commerzbank has for its part always insisted it wants to complete a massive restructuring before considering big new projects.

BANKING

German online bank N26 shutters US service

German online bank N26 said Thursday it was closing its operation in the United States next year, as regulators in Europe place the "fintech" start-up under increased scrutiny.

The N26 logo on a bank card.
The N26 logo on a bank card. Photo: picture alliance/dpa | Christophe Gateau

N26’s 500,000 customers in the US would be able to use their services until January 11th, 2022, the bank said in a statement, after which it would cease to operate in a market it first entered in 2019.

Instead the Berlin-based operation would “sharpen its focus on its European business”, where it already operates in 24 countries and is exploring expansion into more eastern European markets.

N26 said it would also look to launch new “investment products in the coming year” to sit along side its current account service.

Founded in 2013, N26 offers free, online-only banking services to around seven million clients and is one of Germany’s most high-profile financial technology or “fintech” firms.

In October, the bank raised $900 million from private investors, and announced a plan to hire a further 1,000 employees to reinforce its product development, technology and cybersecurity teams.

READ ALSO: German online bank N26 to create 1,000 jobs

At home, N26 has been in the crosshairs of the German banking watchdog BaFin since 2018 after a local news media investigation found that it was possible to open account with forged IDs.

Earlier in the month, the regulator said it was upping its oversight operations at N26, appointing a special representative to monitor the bank’s progress towards solving issues in “risk management with regard to IT and outsourcing” identified by BaFin.

The regulator also limited the number of new customers N26 could take on to 50,000 a month until the shortcomings were addressed.

N26 was already being monitored by BaFin over failures in the start-up’s anti-money laundering system.

BaFin issued N26 with a 4.25-million-euro ($4.8-million) penalty earlier this year in connection with around 50 “suspicious transactions” the bank failed to report promptly enough.

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