Commerzbank of Germany, which only five weeks ago failed to beat off Merrill Lynch in the race to acquire Smith New Court, the brokers, yesterday announced a capital raising exercise that will bring up to DM 1bn (pounds 430m) into its war chest.
The bank said it will issue up to 3.2m new shares. The global issue will take place in November and will be the first to be assigned on the basis of bookbuilding rather than on the traditional subscription-rights method. The size of the offering, to be co-managed by Commerzbank and Goldman Sachs, will be "determined and announced nearer the time of the offering and will be based on prevailing market conditions", the bank said.
The issue will raise Commerzbank's core capital ratio from its current 5.1 per cent "towards a targeted core capital ratio of 6 per cent, which will allow Commerzbank to take advantage of growth opportunities in the market", Martin Kohlhaussen, the bank's chairman, said yesterday.
Stephen Lewis, banking analyst with UBS, said: "Commerzbank has only recently said that as long as its capital ratio is over 5 per cent all is OK. So if it goes up to 6 per cent, the question must be what are they going to do with the money."
There was speculation that as early as next week Mr Kohlhaussen may announce the latest acquisition move. Commerzbank has conceded that its push for Smith New Court, bought by Merrill Lynch for pounds 526m, was opportunistic, but it underlined the bank's determination to bolster its still rather piecemeal international investment banking business.
The news of the impending capital raising fuelled renewed rumours in the City linking Commerzbank and Hambros.