Capital Group dumps 1.75 billion Euro worth of shares in two German lenders Commerzbank and Deutsche bank

The seller was none other than the Capital group, the second-largest shareholder in Deutsche Bank. The Capital group undertook a 1.27 billion euro block transaction on Monday. Simultaneously, around 475 million euros worth of Commerzbank shares were sold, but the seller is unknown.

There was a more than ten percent fall in the shares of the two banks when the trading started on Monday. Cerberus, a US private equity group, previously unwound its bet on Commerzbank and Deutsche Bank. It comes as a big blow to both these lenders.

Capital Group also sold their stake worth 900 million pounds last month in Barclays. It showed that the US investment giant, worth $2.7 trillion, has lost faith in the European banking system. While Capital has not commented, it was the top shareholder in UniCredit of Italy and Société Générale or France, with stakes of 6.4% and 7.8%, respectively, till January.


Both Commerzbank and Deutsche Bank saw years of losses, a decline in market share, and regulatory fines and were now starting to recover. The two banks even mooted the idea of merging in 2019 but could not do so due to costly systems which would come into play for restructuring.

The sentiment on European Banks has become bleak due to the Ukraine-Russia war and the Coronavirus. For many years the US and Asian banks have performed far better than their European counterparts. It has been due to misconduct issues in legacy, not enough investments in technology, and fragmented markets.

Deutsche stated that they remain confident in their strategy, and their risk management and business model capabilities have proven their resilience in times of difficulties. They also stated that their objectives would stay unchanged and have performed strongly since the start of this year.

Both Commerzbank and Deutsche Bank have almost lost all the gains in the share market that they experienced this year. Commerzbank stated that the sale of shares does not affect their strategy going forward.

The bank also raised the financial targets in March due to a promising start to 2022.