Commerzbank AG abandoned its planned sale of Polish subsidiary mBank SA, stating the coronavirus outbreak has made it impossible to attract a worthwhile offer.
“The current market environment, which is marked by the corona crisis, does not allow for an attractive valuation in line with the underlying value of mBank,” Chief Financial Officer Bettina Orlopp said in a statement on Monday, May 11.
Commerzbank’s plan to sell the business was already in doubt before the virus crisis hit, as a first round of bidding drew few potential buyers and no attractive offers, according to people with knowledge of the matter. The German bank later stated its better-than-expected capital ratio gives it enough of a financial cushion to do without an mBank sale.
CEO Martin Zielke also said that he will seek cost cuts that go beyond those announced in September. He recently hired the consultant McKinsey & Co. to review the bank’s business model in a sign that an announcement planned for August may involve more than just an update on savings targets, Bloomberg reported on Friday.
Commerzbank’s decision to sell mBank had long been criticized by investors and analysts, who questioned the plan to divest the bank’s best performing unit to fund the restructuring of less profitable ones.
Full Content: Bloomberg
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