Allianz Ready to Convert Commerzbank Non-voting Stake Say Sources

By and | January 11, 2012

German insurer Allianz is ready to adjust its €750 million [$952 million] non-voting capital stake in Commerzbank to help the German lender strengthen its balance sheet, two sources familiar with the talks between the two parties said.

Allianz inherited the non-voting capital stake, known as silent participations, when it sold its banking arm Dresdner Bank to Commerzbank in 2008.

European bank regulators do not recognize the German silent participation non-voting capital as core capital, because it does not have the same risk-absorbing properties as equity.

How Allianz will modify the non-voting capital stake remains unclear, the sources said.

There are no formal agreements, but the prospect of Allianz helping Commerzbank strengthen its core capital comes as Germany’s second largest bank needs to raise €5.3 billion [$6.73 billion] in additional core capital by mid 2012.

Commerzbank and Allianz declined to comment.

Commerzbank shares rose 4.9 percent to €1.30 [$1.65] a share on the news.

Commerzbank is optimistic it will not need another bailout to build its capital, an insider to the talks said. Germany’s second largest bank needs to tell European Banking regulators by January 20 how it proposes to increase its capital buffer to better withstand market jitters.

Allianz Chief Financial Officer Oliver Baete has made it clear in talks with Commerzbank that the insurer does not want to suffer financially from any changes to the stake.

(Reporting By Alexander Huebner, Jonathan Gould and Christian Kraemer; Writing by Edward Taylor; Editing by Greg Mahlich)

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