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FINANCIAL CRISIS

Commerzbank becomes first private bank to ask Berlin for help

Text by: AFP
1 min

Germany's second biggest private bank, Commerzbank has obtained a 8.2 billion euro capital infusion from the state. It is the first private German institution to ask for help since Berlin issued its rescue package.

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Commerzbank, the second-biggest German bank, said on Monday it would benefit from a state capital infusion of 8.2 billion euros (10.5 billion dollars) and 15 billion more in debt guarantees.

Commerzbank, the first major private German bank to apply for state aid, also posted a third-quarter net loss of 285 million euros and an operating loss of 475 million.

"In truth, we have not covered ourselves in glory here. In future, we will have to improve," chairman Martin Blessing said in a statement.

The international financial crisis had cost the bank 1.1 billion euros in losses from market operations, the statement added.

Commerzbank responded to pressure from German authorities for banks to apply for aid under a rescue package that includes up to 80 billion euros in capital injections and 400 billion in loan guarantees.

The bank, which is acquiring Dresdner Bank from the insurance giant Allianz, will use both parts of the package.

In accepting state aid, Commerzbank will agree to forego paying a dividend in 2009 and 2010 and its directors will see their salaries capped at 500,000 euros per year.

"I can realize why this policy is in place," Blessing said. "In particular for banks that require assistance in the form of government money."

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