The repurchase of €1.27 billion of so-called trust preferred securities “will have a one-off positive effect of more than €700 million on our consolidated results and will result in a respective increase of Core Tier 1 capital,” Commerzbank said in a statement. “The transaction marks another step in optimising our capital structure in light of the transition to the new regulatory requirements.”
Investors had from December 5-13 to decided whether to sell the securities back to Commerzbank.
Last week, the European Banking Authority said German banks needed to raise €13.1 billion in new capital to withstand future financial shocks.
According to the EBA’s calculations, Deutsche Bank, the country’s biggest, needed €3.2 billion and Commerzbank, the number two, needed €5.3 billion.
Analysts and investors have speculated about whether Commerzbank would be in a position to raise the capital under its own steam, or require state funding after it already had to be bailed out in the 2008-2009 financial crisis which left the government with a 25-percent stake.
The bank has said it can manage on its own.
Investors welcomed the news, with Commerzbank shares showing a gain of 3.68 percent to €1.21 on the Frankfurt stock exchange in late afternoon trading.