Germany's Commerzbank is abandoning its plan to sell off its majority stake in Polish unit mBank, concluding the Covid-19 crisis will prevent it getting an acceptable return.
Commerzbank signalled its intention in September to sell its 69.3% stake in mBank as part of a wide-ranging overhaul after a merger with Deutsche Bank fell through.
However, the lender now says that in market conditions dominated by the coronavirus, "a transaction doesn't seem feasible at reasonable terms".
While the mBank sale was initially designed to reduce risk-weighted assets and to release capital, Commerzbank says it has since achieved sufficient flexibility with regards to its Common Equity Tier 1 ratio.
Bettina Orlopp, CFO, Commerzbank, says: "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."