Cerberus May Be Just What Commerzbank Needs
US hedge fund Cerberus’ newly-acquired 5-percent stake in Germany’s second-largest bank could be a saving grace for the struggling lender.
For Commerzbank, the paragon of successfully-rebounded banks might reside in Vienna. Its name is Bawag, an Austrian lender that has put losses, crises and risky speculative deals well behind it. Years ago, Bawag began to pivot away from investment banking to focus more on its retail business. This may have been a relatively boring choice from a banker’s perspective, but thanks to its rigorous frugality, Bawag has since become one of the most profitable banks in Europe.
The Austrians didn’t accomplish this feat on their own. They had help from the US hedge fund Cerberus Capital Management, which holds a majority stake in Bawag. Last week, this very same financial investor procured a modest stake in Commerzbank as well.