Commerzbank, Germany's second-largest lender, has received regulatory approval from the European Union (EU) to wind down its Eurohypo mortgage business as part of its government-financed bailout.
According to a Reuters report, Commerzbank was originally instructed by the EU to sell Eurohypo by 2014 as part of the 18 billion euro bailout. However, the lender was unable to find a buyer. Instead, Eurohypo's commercial real estate operations and public finance unit will be spun off while the remainder of its lending offices will cease writing new business.
‘The winding down of Eurohypo on the balance sheet of Commerzbank, plus a prolongation of the acquisition ban, are an adequate substitute to the divestiture of Eurohypo,’ said EU Competition Commissioner Joaquin Almunia in a press statement.
Furthermore, the EU extended an acquisition ban on Commerzbank for two years, ending in March 2014.
