Financial crisis

Shareholders of Germany's Commerzbank on Saturday approved the government's acquisition of more than 25 percent, making Berlin the single largest shareholder in the company.

Over 97 percent of shareholders reportedly backed the decision, passed at a two-day annual shareholders meeting in Frankfurt on Saturday.

Commerzbank, which was forced to ask for state aid last year, is to issue 295 million new shares at a price of six euros per share, according to a statement by the bank.

The government is to acquire the new shares via the Financial Market Stabilisation Fund (SoFFin) -- the German government's rescue fund.

On Thursday, the European Commission approved the second tranche of German state aid to the tune of about 10 billion euros.

The Brussels-based body insisted that the plans for the new injection of capital, which comes after a first infusion of eight billion euros, is meant to ensure the bank's long-term health without giving it an unfair advantage over rivals.

In return for the Comission's approval, Commerzbank will be forced to recentre its activities into business and individual retail banking and abandon its investment banking and commercial real-estate activities, which have accounted for about 45 percent of its total activities.

Commerzbank chief executive Martin Blessing told press on Friday that the state aid will be paid back in full and that the bank currently doesn't require any further state aid.

Struggling Commerzbank ended 2008 with a sharp loss of 6.6 billion euros, due to the integration of ailing Dresdner Bank and the global credit crunch.

The bank has stayed in the red in 2009, posting a net loss of 861 million euros for the first quarter on Friday.

Following the full integration of the Dresdner Bank in late January 2009, Commerzbank executives underlined that the restructuring would pay off in the future, forecasting a profit by 2011 at the latest, and an operating profit of more than four billion euros by 2012.

nk/AFP/dpa
Editor: Kateri Jochum