Cerberus Cuts Stake in Deutsche Bank

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The US investment concern has also reduced its stake in Commerzbank, another large German lender.

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Based on the price of the shares on Monday, the combined value of the stock sold is approximately $500 million.

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Cerberus bought both stakes in 2017, becoming one of the biggest backers of both banks. It owned 3% of Deutsche Bank and 5% of Commerzbank.

The firm’s thinking was that it could make money in a profit-hungry banking landscape, along with economic growth, among other factors.

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But Europe’s recovery has been weak, and the German financial system stands against banks making money in several ways. Commercial banks such as Commerzbank, second largest after Deutsche Bank, compete against state-owned Landsbank and savings banks that offer cheap loans to consumers and businesses, with little pressure to make a profit.

Deutsche Bank and Commerzbank’s shares are improving as overhauls at banks are bearing fruit. But since Cerberus bought into the companies, they were also left behind by poor performance in European bank stocks.

Since Cerberus’ stake in Commerzbank was disclosed in July 2017, the German bank is down 31%, while the Stockx 600 Bank Index is down 18%. Shares of Deustche Bank are down 21% since November 2017, while the Stoxx 600 Banks index is down 14% over the same period.

In 2019, Deutsche Bank and Commerzbank tried to merge to increase their chances, but the move failed and each followed its own strategy.

In 2020, Cerberus had a public fight with management at Commerzbank, which it blamed for a development plan it said was not ambitious enough. Eventually the bank’s then chief executive officer and its president left, but Cerberus opposed the chairman who had been replaced.

Cerberus’ move to sell some of its stake in banks follows the departure of Matt Zams as Cerberus’ chairman last year. He oversaw the firm’s investments in the financial-services sector.

With Deutsche Bank, Cerberus took on the unusual role of becoming a paid advisor to the bank. This put Mr. James in a position to try to fix Deutsche Bank, which had been suffering for years from losses, restructuring, legal fines and management businesses, and was attempting to salvage Cerberus’ investments.

Businesshala reported that Cerberus’ stake in Deutsche Bank accounted for less than half of its payments until the end of its advisory relationship with the bank in 2019.

Since 2019, Deutsche Bank’s performance has improved as the bank has cut costs and its investment-banking business thrived under the pandemic.

Morgan Stanley is handling the stake sale for Cerberus.

Write Patricia Kowsmann at [email protected]


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