Postbank IPO Could Provide Spark to German Stock Market

Stock market enthusiasts have reason to hope again. The head of Postbank, Wulf von Schimmelmann, and the executive chairman of Deutsche Post, Klaus Zumwinkel, have big things planned.

On June 21, Postbank goes public. With its clear position as a private bank and a low-risk business model, the credit institute is "fit for the stock market," said Zumwinkel.

Postbank plans to list up to 50 percent of its equity capital minus one share on the German Stock Exchange -- meaning that Deutsche Post will remain the majority shareholder. A price range for the initial public offering (IPO) is expected to be set June 5 or 6, with the final price to be set June 19. The application for shares begins on June 7. Experts are already speculating on a price of €30 per share.

Proceeds of about €3 billion should flow into Deutsche Post's coffers as a result of the listing. The company said it plans to use the money on a stratetgic expansion -- among the countries mentioned were Austria and Denmark.

Prognosis positive

At Postbank and Deutsche Post, it's optimism all the way. And with good reason. Postbank is Germany's largest private bank, with some 11.5 million customers. According to Schimmelman, Postbank's first quarter results have been company record-breakers. "The savings deposits alone have climbed by €1.6 billion," he said, adding that, last year, the bank managed to triple its net profits in comparison with the previous year.

All in all, the prognosis for Postbank's IPO looks good. And potential shareholders are already hoping that the listing will provide the impetus to bring Germany's flagging capital market back to life. The Postbank IPO is the biggest stock market debut Europe has seen in more than three years, according to Markus Straub of the German Shareholders Association. In Germany, it's the first stock market entry in 2 1/2 years, following the failed attempts of semi-conductor companies Silitronic and X-Fab to go public in March.

Anticipation is building about how Postbank stock will perform on the German stock market index, the DAX.

But Straub has retained a healthy skepticism. It's still too early to comment on the numbers being floated, he said, adding that it's best to wait until the final share price has been announced. Past experience with the IPO's of both Deutsche Post and Deutsche Telekom have shown it's better to err on the side of caution. "As an investor, I know that state companies and their subsidiaries haven't lived up to all the hype," Straub said.

The next Telekom?

So will Postbank be the new darling of German shareholders?

Even Postbank employees have no illusions there. While they expect that with the IPO, the company will become more popular with private investors, they say Postbank is more interested in attracting large corporate investors. That would certainly save Straub and others at the German Shareholders Association some headaches.

"We hope that there won't be a big marketing campaign like there was with the Telekom shares, where you have celebrities trying to convince ordinary people to buy overpriced shares," said Straub, referring to Telekom's infamous bid to get ordinary Germans to buy their stocks in the late 1990s.

Shortly before the Postbank IPO was announced, the Financial Times Deutschland reported that Deutsche Bank was aiming for a complete takeover of Postbank, and that there'd already been discussions to that effect with the government. Zumwinkel denies the rumours, though, saying Deutsche Post intends to be the majority shareholder for the long run.