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The German banks and the stock market - Why an unusual relationship exists
According to a report from www.faz.net, the German banking landscape is characterized by state-owned banks, savings banks and cooperative banks. Die börsennotierten Banken wie Deutsche Bank und Commerzbank sind nicht ertragsstark genug und weisen niedrige Marktwerte im Vergleich zu ihren Vermögenswerten auf. As a result, they prefer share buybacks instead of share issuances. This approach is now being reinforced by the disappearance of Aareal Bank from the stock market. Commerzbank has set itself the goal of achieving a return on equity of at least 11 percent by 2027. However, it remains to be seen whether this is realistic given past profits. Both Commerzbank and Deutsche Bank are currently buying back their own shares in order to...
The German banks and the stock market - Why an unusual relationship exists
According to a report by www.faz.net,
The German banking landscape is characterized by state-owned banks, savings banks and cooperative banks. The listed banks such as Deutsche Bank and Commerzbank are not profitable enough and have low market values compared to their assets. As a result, they prefer share buybacks instead of share issuances. This approach is now being reinforced by the disappearance of Aareal Bank from the stock market.
Commerzbank has set itself the goal of achieving a return on equity of at least 11 percent by 2027. However, it remains to be seen whether this is realistic given past profits. Both Commerzbank and Deutsche Bank are currently buying back their own shares so as not to have to raise additional equity capital.
Even new start-ups in the financial sector rarely use the capital market to issue their own shares. The announced IPO of Oldenburgische Landesbank is pending, and Aareal Bank will disappear from the stock market on November 21st.
These developments show that banks and stock exchanges in Germany are difficult to fit together. The increased exposure of banks to the stock market affects investor confidence and may affect market liquidity in the long term. It also illustrates the challenges and uncertainties that German banks face.
Read the source article at www.faz.net