German banking major Commerzbank has decided to retain a majority stake in its Polish-based subsidiary mBank and terminate the sales process.
The bank abandoned its divestment plan as it believes that it may not receive an acceptable return on sale amid the Covid-19 crisis.
The mBank will continue to be a part of Commerzbank, with the group holding 69.3% majority stake valued at nearly €1.2bn ($1.3bn), down from €2bn earlier this year.
Commerzbank CFO Bettina Orlopp said: “It is clear that we will only sell such a valuable asset as mBank if the terms are right.
“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.
“Our strong capital position gives us the leeway to implement our Commerzbank 5.0 strategy and make the planned investments without the need to sell mBank.”
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By GlobalDataThe Frankfurt-based lender announced its divestment plans back in September 2019, after its merger deal with Deutsche Bank fell through.
The agenda of the divestment was to reduce risk-weighted assets and to release capital within the group for faster implementation of the Commerzbank 5.0 strategy.
The bank, however, added that it has been achieving sufficient flexibility with regards to its Common Equity Tier 1 (CET1) ratio.