The Commerzbank appears once again in the spotlight as the federal government unexpectedly increases its stake in the bank, thereby shelving speculated plans of an exit for the time being. Speculations about the bank's leadership position are also in full swing.

The discussion about the state's exit from Commerzbank, which has been ongoing for some time, has taken a surprising turn. The federal government has decided not to sell its stake in the institute as part of a share buyback program. As a result, the state's share in the bank is expected to increase from 15.75 percent to about 16.5 percent.

This decision is particularly surprising against the backdrop that many in the bank's management had expected the federal government to sell shares as part of the share buyback program in order not to let the state's share increase further. Commerzbank itself did not want to comment on this topic.

It's not the first share buyback program in which the federal government is not participating. Already in June 2023, it had increased its stake from 15.6 to 15.75 percent due to a 122 million euro buyback program. Now, a second program is underway, in which the institute wants to repurchase its own shares worth up to 600 million euros. As a result, the free float decreases and thus the state's share automatically reduces.

This development is expected to gain even more significance as Commerzbank has indicated higher profit-sharing. For the year 2024, it plans to distribute at least 70 percent of the profits, and in the following years, even about 90 percent.

The state rescued Commerzbank during the financial crisis of 2008/2009 with 18 billion euros, but the state aid has already been repaid. Nevertheless, the federal government is still the largest individual shareholder.

Finance Minister Christian Lindner has repeatedly emphasized that the state does not want to remain involved with Commerzbank indefinitely. The Finance Agency regularly reviews the participation, but there are currently no concrete plans to significantly reduce the share or to sell it off completely. In this, Lindner takes into account not only the interests of taxpayers, but also the importance of the bank for the financial center and the mid-sized economy.

Despite the resurgence of Commerzbank in recent years, particularly under CEO Manfred Knof, who cut nearly 10,000 jobs and closed numerous branches, there is now increased discussion about the future leadership of the bank.

Knof's Contract Expires in 2025, but He Has Not Yet Commented on Whether He Seeks Another Term. Supervisory Board Chairman Jens Weidmann Plans to Discuss a Possible Contract Extension with Knof Only at the End of 2024.

The personnel issue is particularly explosive because CFO Bettina Orlopp had already aspired to become CEO during the last change at the helm of the institute. However, the supervisory board opted for Knof. To retain Orlopp, she was appointed as deputy CEO.

However, she continues to be considered a candidate for higher positions at other companies, which would be a great loss for Commerzbank. It remains to be seen how the situation will develop and who will take the helm at the bank in the future.