Reuters: Hot Stocks: UPDATE 1-Commerzbank seeks advisors for capital hike - sources

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UPDATE 1-Commerzbank seeks advisors for capital hike - sources Mar 12th 2013, 16:45 Tue Mar 12, 2013 12:45pm EDT * Commerzbank explores capital increase -sources * Commerzbank could issue up to 10 percent of new shrs * UBS, Deutsche Bank pitched for cap hike mandate -magazine * Shares drop over 3 percent (Recasts with sources) FRANKFURT, March 12 (Reuters) - Germany's Commerzbank invited banks to pitch for an accelerated capital increase of up to 10 percent of new shares, two sources familiar with the matter said on Tuesday. Such a move could bring proceeds of between 700 million euros to 800 million euros ($911-$1.04 billion), Germany's Manager Magazin reported earlier on Tuesday, citing financial sources. In a separate move, Germany's second-largest lender, which received a state bailout in the 2009 financial crisis, is exploring ways to bolster its capital cushion by selling real estate loan portfolios for which the lender would otherwise have to put aside extra capital. German companies can issue up to 10 percent of new shares without asking for shareholder approval. It's unclear what the exact volume of the capital hike would be, Manager Magazin said, adding that Deutsche Bank and UBS had been invited to pitch. The level of proceeds ultimately depends on the development of the Commerzbank share price, one of the sources said. Commerzbank shares dropped 3.25 percent to 1.39 euros following news of the potential capital hike. The bank declined to comment on the report. Neither Deutsche Bank nor UBS were immediately available for comment. CAPITAL STRENGTHENING Earlier this year Commerzbank, whose core capital ratio stood at 7.6 percent at the end of 2012, said it would take another two to three years to reach bank regulators' target of 9 percent by 2019. Commerzbank also warned investors not to expect a dividend for 2013, saying it expected loan loss provisions to rise and that it would take a hit of about half a billion euros in the first quarter of 2013 from a move to cut up to 6,000 jobs by 2016. The German bank has taken a raft of steps to strengthen its capital over the past 12 months. In June, Commerzbank issued 176.5 million new shares to sell to employees as part of a share-based remuneration programme. In February 2012, Commerzbank hiked its capital by 10 percent by swapping hybrid capital instruments, subordinated debt securities and other capital instruments into shares. ($1 = 0.7684 euros) (Reporting By Alexander Huebner, Philipp Halstrick, Andreas Kroener and Edward Taylor; editing by Maria Sheahan and Victoria Bryan) Link this Share this Digg this Email Reprints

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