CBK.F - Commerzbank

[ukvalueinvestment]

Is anyone out there familiar with Commerzbank?

 

Seems to be one of the cheapest European banking names.  Market hated its exposure to bad RE and Shipping Assets.  Yet it's capital ratios are comfortable and rising, it's sold some assets and I've seen stories about it selling more.

 

It trades around 0.65 of tangible book, I think.

 

Is this story all about the remaining bad assets, or is there something beyond that?

 

BNP is trading 1* tangible book.

Unicredit is trading 0.75* tangible book

[schin]

I've been looking at this and Deutsche Bank... There has always been talk about consolidation and I think the EU sees the writing on the wall now -- US and Chinese banks are eclipsing it in terms of assets and also market cap.  I think they realize scale is something they need to worry about. In terms of size, HSBC and BNP headline the banking sector over there... There are so many articles showing the number of banks relative to population that is obviously overbanked. As such, Commerzbank is open to merging.

 

The latest news shows Unicredit, UBS, SocGen, ING, Santander seemingly interested. It's also trading at .3 TBV.. so, whoever buys it, has a nice gain coming from negative goodwill. Overall, I think there are more positives than negatives. This is my largest holding right now.

[SharperDingaan]

We would suggest to you that Commerzbank escaped a bullet, re the attempted DB/Commerzbank merger.

The discussions would have required Bundesbank 'permission', and would not have been permitted unless at least one of them was in serious trouble. Supposedly; merge two weaker banks together, dilute the individual risks over the now larger pool, and produce a bigger bank that can 'grow' its way out of trouble (with a little 'help' from the Bundesbank). Yet it didn't happen?

 

DB had such a problem that it was being pressured to restate prior financials? Managed to lose big on Berkshire insured municipals, and STILL hasn't been able to unwind them? A Bundesbank that apparently preferred a DB merge (market solution), versus taking the position off DB's hands via a mirror swap? And just maybe, the DB auditors refusing to sign off on the financials - unless DB actually evidenced steps to get rid of this toxic asset? But this is Germany, with corporate governance under a 2 board structure: we would suggest that it is only BECAUSE OF the worker representaion, that DB is still here.

 

The trend in the Commerzbank capital ratios tells you they have their game together, and have made the hard adjustments. Now its just execution, and changimg sentiment  through delivery of results. The Bundesbank would seem to have a similar view.

 

SD

 

 

[schin]

I would concur that Commerzbank dodged a bullet with DB.  I am not sure if this was brokered by the government to get more M&A activity because they need an exit strategy for their 15% ownership. Two, they really do need a healthy german bank for their next down turn.

 

I concur that Commerzbank is so much more advanced in their IT and compliance systems and they are getting more efficient.. Definitely shouldn't be trading at .3 TBV...  Any takeover is a net positive with the negative goodwill. I was hoping DB would buy them just for access to their IT systems.