The German key player Commerzbank announced that it would not sell its Polish subsidiary mBank after all, citing poor market conditions.
Therefore mBank is going to remain part of the Commerzbank Group.
Commerzbank has informed it is set to sell its 69.3 percent in the Polish subsidiary bank during September last year, but the COVID-19 crisis has convinced the management to take a step back with this plan.
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“Under the current market conditions which are dominated by the coronavirus crisis, a transaction doesn’t seem feasible at reasonable terms,” was the official Frankfurt-based banks statement.
In 2019, mBank achieved a turnover of 1.1 billion euros ($1.01 billion) and an operating result of 289 million euros, contributing almost a quarter of Commerzbank’s total revenues, according to its annual report.
At the Q3 of 2019, the main objective of the sale was to immediately reduce risk-weighted assets and to release capital within the group for a more straightforward implementation of the Commerzbank 5.0 strategy.
But the mBank’s share value has fallen more than 50% since the beginning of 2020, meaning Commerzbank’s 69.3% stake is now worth just around €1.2B ($1.3B), down from over 2 billion euros of value.
“It is clear that we will only sell such a valuable asset as mBank if the terms are right,” said Bettina Orlopp, chief financial officer at Commerzbank.
Commerzbank is partially owned by the state and its profits dropped by over 25 percent to 644 million euros in 2019.
Now the bank is about to publish the results for the first quarter of 2020 on Wednesday. Analysts are expecting a net loss of 240 million euros, according to German national news agency DPA.