Commerzbank to pay first dividend in 8 years

Commerzbank will pay a dividend for the first time since 2007 as its recovery gains ground, it announced on Monday, the day after its chief executive, the architect of the bank's turnaround, said he would step down in a year's time. Germany's second-largest lender said it will propose a payout of 20 euro cents per share for 2015.

Commerzbank shares rose 3 per cent in early trading, while the Stoxx Europe 600 banking sector index was down 0.7 per cent. Martin Blessing, the only chief executive of a German state-rescued bank to remain in power, had recently skirted questions on his future, but said on Sunday he would leave the bank after his contract expires in October 2016 as it was time for someone else to take over the running of the bank.

Mr Blessing, who took the helm in May 2008, has spent most of his time restructuring the lender after its near-collapse following the Dresdner Bank takeover in the midst of the financial crisis. The state had to rescue

Commerzbank with the infusion of more than €18 billion , much of which has now been repaid. Under Mr Blessing’s direction, the bank, which finances more than a third of the country’s exports, has cut costs and shrunk its balance sheet by exiting shipping and commercial property loans, among others.

Instead he has focused Germany’s second-biggest bank on corporate and retail banking. “Today, Commerzbank has a robust business model, excellent employees and managers, as well as a culture that is the envy of many companies,” Blessing said in a statement on Sunday. It is not clear who will succeed Mr Blessing.

Commerzbank does not have a deputy chief executive on its board. Markus Beumer, who heads the Mittelstandsbank unit, which serves Germany's raft of medium-sized companies, is seen as a candidate to take the helm but the bank is also expected to scout for outside candidates.

In the third quarter Commerzbank beat analysts’ expectations for pretax profit as the lender’s retail bank thrived, provisions for bad loans decreased and its run-down portfolio of unwanted assets broke even. The lender posted a pretax profit of €401 million in the July to September period, compared with €349 million expected by analysts polled by Reuters.

Commerzbank's cash cow Mittelstandsbank unit, which caters to Germany's raft of medium-sized companies, saw operating profit decline, partly due to a write-down on a loan to failed construction group Imtech.