World Economy

SocGen to Buy Commerzbank EMC Unit

SocGen to Buy Commerzbank EMC Unit
SocGen to Buy Commerzbank EMC Unit

French bank Societe Generale said on Tuesday it will buy Commerzbank’s equity markets and commodities business, strengthening its presence in areas such as derivatives, while the Frankfurt-based bank itself looks to sell off non-core assets.

The two banks did not disclose a price for the transaction, although Commerzbank said its EMC division had 2017 gross revenues of €381 million ($443.18 million), CNBC reported.

Commerzbank, still partly owned by the German government, has been restructuring as parts of its business have struggled amid weak markets and slow loan demand.

SocGen said the purchase would boost its Lyxor arm, which has a strong presence in the field of exchange traded funds and raise its general profile in Germany, the eurozone’s biggest economy.

SocGen’s investment bank has been under pressure following the departure of previous head Didier Valet in March over a financial settlement of an investigation into alleged Libor rates-rigging case.

It has also had some relatively tepid performances in equity derivatives—an area where it has been traditionally strong.

The sale is in line with the German bank’s “4.0 strategy,” which entails divesting non-core assets to raise capital for the company’s core banking franchise, said Commerzbank Chief Executive Martin Zielke.

“We are simplifying our business, we are contributing to our cost-cutting targets, and we are freeing up capital for the benefit of our core business with private and corporate clients,” added Zielke.

Commerzbank’s larger rival Deutsche Bank has also been under pressure, of late, with the German bank having failed a US regulatory stress test recently.


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