Germany’s Commerzbank has agreed to sell its commercial real estate lending bank, Eurohypo.
Commerzbank said a condition of receiving €10 billion of state aid from financial market stabilization fund, SoFFin, was to dispose of the subsidiary.
Today, the European Union Commission gave the go-ahead to the understanding, which Commerzbank says was struck in January this year.
Commerzbank will dispose of Eurohypo within the next five years. In addition, the Bank plans to divest other subsidiaries, Kleinwort Benson Private Bank, Dresdner Van Moer Courten, Dresdner VPV NV, Privatinvest Bank AG, Reuschel & Co. KG and Allianz Dresdner Bauspar AG by the end of 2011.
The bank is banned from acquiring any other businesses in the next three years.
Eurohypo, which specialises in public finance as well as real estate, operates in the US and Asia as well as Europe.
It is the latest upheaval of Germany’s real estate banking sector amid the economic turmoil. Germany plans to nationalize Eurohypo’s rival, Hypo Real Estate. It currently owns 47 percent of the stricken lender.