Germany’s Commerzbank has decided to launch an issuance programme to raise up to €3bn ($3.29bn) in additional tier 1 (AT1) capital.
The capital will help the bank meet regulatory requirements and to act as a protective layer that can absorb losses in unprecedented times like the ongoing Covid-19 pandemic.
The bank will gradually issue the capital in the form of securities like AT1 bonds until 21 May 2024.
These bonds were designed in response to the 2008 financial crisis to ensure investors do not run into losses.
The first round of issuance will commence at a date decided by the bank.
Commerzbank CFO Bettina Orlopp said: “We are creating a framework with the AT1 issuance programme that can be used flexibly.
“This will enable us to further optimise our capital structure and also respond to the additional business opportunities that have arisen for us in the context of the coronavirus crisis and the changing regulatory requirements.
“The programme will give us the opportunity to act rapidly in response to the capital requirement and the market environment.”
The programme also allows Commerzbank to make use of recent regulatory changes in future issuances, while AT1 can be used to meet the immediate capital requirements.