share in this article
Overnight, the investor placed two blocks of shares of more than 5% each in major German banks for a total of 1.75 billion euros from institutional investors via investment bank Morgan Stanley . The bank did not name the seller; but it will likely be fund manager Capital Group Companies, which is behind the $165 billion EuroPacific growth fund.
Besides the Los Angeles-based fund giant, only US asset manager Blackrock has such large blocks of shares in both banks; however, these are primarily exchange-traded funds (ETFs) that mirror major stock indices and therefore cannot be sold easily. Capital Group declined to comment on the placement. After the sale, however, official notifications regarding the holdings should be due within a few days.
Both banks said almost identically that the investor’s exit would not change their respective strategies. “The bank’s business model and risk management have proven themselves in these difficult times,” spokespeople for Deutsche Bank and Commerzbank said. Both highlighted a promising start to the year.
It wasn’t until the start of the year that hedge fund Cerberus turned much of its Deutsche and Commerzbank shares into cash. He now owns less than three percent of both banks. According to insiders, Cerberus had bet on a bank merger – a bet that didn’t work out. Neither the big merger between the two houses that we sometimes talked about, nor the merger with a foreign bank.
It is unclear what motivated the Capital Group to get involved. With assets under management of nearly two trillion dollars, he is one of the world’s largest investors and only increased his position at Deutsche Bank in November – much to the institute’s delight. At the time, a spokesperson called them long-term investors. The Los Angeles investor hardly comments on his commitments. According to Refinitiv data, he recently owned 5.8% of Deutsche and 5.3% of Commerzbank.
Equity investments weigh on Deutsche Bank and Commerzbank
A media report on Tuesday of the sale of large blocks of shares by one or more investors put Deutsche Bank and Commerzbank shares under massive pressure. Deutsche Bank papers sometimes fell nearly 11% in the morning and were recently down 8.39% at 10.92 euros. Commerzbank shares recently lost 8.19% to 6.44 euros, having previously fallen as low as 9.5%.
As reported by the Bloomberg news agency after reviewing the offer documents, the investor sold about 116 million shares of Deutsche Bank at 10.98 euros each and about 72.5 million shares of Commerzbank at 6.55 euros each via the investment bank Morgan Stanley. Demand was always significantly higher than supply.
The sharp price declines at Deutsche Bank and Commerzbank occurred in an already weak stock market and industry environment. All the main European indices recorded more or less clear losses on Tuesday. Meanwhile, the European banking sector outperformed negatively, with the Stoxx Europe 600 Banks sector index extending its recent decline to 2.6%.
However, since the start of the year, silver house prices have moved significantly better than the overall market. This is mainly due to signals from the US Federal Reserve indicating that it will raise its key interest rates even faster and more strongly than expected due to high inflation. The increased prospect of an even faster recovery in interest rates ensured higher yields in the bond markets. In the bond and credit business in particular, banks earn more when market interest rates rise.
Munich (Reuters) / FRANKFURT (dpa-AFX)
Leverage must be between 2 and 20
More news on BlackRock Inc.
Image sources: Elpisterra / Shutterstock.com, Commerzbank AG