Global financial crisis in 2009

Last updated

Analysts and investors criticized the merger of Commerzbank and Dresdner Bank amid the ongoing global economic and financial crisis. The transaction significantly affected the stock prices of all involved companies. [1] Due to the credit risks of Dresdner Bank that became apparent at the end of 2008, Commerzbank utilized the Special Fund for Financial Market Stabilization (SoFFin). [2] After the German federal government and the European Commission agreed on the assistance details, Commerzbank received a silent participation of 8.2 billion euros in early December 2008. [3] [4] Initially, Commerzbank emphasized that the state's participation was necessary due to the devaluation of banks and not specifically because of the takeover of Dresdner Bank. [5] This assessment had to be revised. Commerzbank on 8 January 2009 sought additional state aid, [6] leading to the Federal Republic of Germany under Chancellor Angela Merkel acquiring over 25 percent of Commerzbank's shares, thereby securing a blocking minority. This was the first partial nationalization of a German financial institution. [7] [8] The silent participation of SoFFin increased to around 16.4 billion euros. [9]

On the evening of January 18, the Danish Parliament agreed to a financial package worth 100 billion Danish kroner (17.6 billion USD). [10] [11] [12] In response, markets panicked yet again. On January 22, the editorial board of The Christian Science Monitor wrote that the four largest U.S. banks "have lost half of their value since January 2." [13]

The two-month period from January 1-February 27 represented the worst start to a year in the history of the S&P 500 with a drop in value of 18.62%. By March 2, the Dow Jones Industrial Average Index had dropped more than 50% from its October 2007 peak. [14] The decline has been compared to that of the 1929 Great Depression, which was 53% between September 1929 and March 1931. [15]

On March 6, the Bank of England announced up to 150 billion pounds of quantitative easing, increasing the risk of inflation. [16]

In March 2009, Blackstone Group CEO Stephen Schwarzman said that up to 45% of global wealth had been destroyed by the global financial crisis. [17]

By March 9, 2009, the Dow had fallen to 6,500, a percentage decline exceeding the pace of the market's fall during the Great Depression and a level which the index had last seen in 1997. On March 10, 2009, a countertrend bear market rally began, taking the Dow up to 8,500 by May 6, 2009. Financial stocks were up more than 150% during this rally. By May 9, financial stocks had rallied more than 150% in just over two months.

On June 22 the World Bank projected that the global production for 2009 would fall by 2.9%, the first decline since the second world war. [18]

See also

Related Research Articles

<span class="mw-page-title-main">Dresdner Bank</span> Former German bank

Dresdner Bank AG was a German bank, founded in 1872 in Dresden, then headquartered in Berlin from 1884 to 1945 and in Frankfurt from 1963 onwards after a postwar hiatus. Long Germany's second-largest bank behind Deutsche Bank, it was eventually acquired by Commerzbank in May 2009.

<span class="mw-page-title-main">KfW</span> German state-owned investment and development bank

The KfW, which together with its subsidiaries DEG, KfW IPEX-Bank and FuB forms the KfW Bankengruppe, is a German state-owned investment and development bank, based in Frankfurt. As of 2014, it is the world's largest national development bank and as of 2018 Germany's third largest bank by balance sheet. Its name originally comes from Kreditanstalt für Wiederaufbau. It was formed in 1948 after World War II as part of the Marshall Plan.

<span class="mw-page-title-main">Commerzbank</span> European commercial bank

The Commerzbank Aktiengesellschaft is a European banking institution headquartered in Frankfurt am Main, Hesse, Germany. It offers services to private and entrepreneurial customers as well as corporate clients. The Commerzbank Group also includes the German brand Comdirect Bank and the Polish subsidiary mBank.

Kleinwort Benson was a leading investment bank that offered a wide range of financial services from offices throughout the United Kingdom and Channel Islands. Two families, the Kleinworts and the Bensons, founded two different merchant banks in London. They merged in 1961 to create Kleinwort Benson Lonsdale, later Kleinwort Benson. Following its acquisition by Société Générale in June 2016, it was merged with SG Hambros, already a subsidiary of Société Générale, to form Kleinwort Hambros in November 2016.

<span class="mw-page-title-main">Silberturm</span> Skyscraper in Frankfurt, Germany

Silberturm, formerly known as Dresdner-Bank-Hochhaus and Jürgen-Ponto-Hochhaus, is a 32-storey, 166.3 m (546 ft) futurist skyscraper in the Bahnhofsviertel district of Frankfurt, Germany. It was the tallest building in Germany from 1978 until 1990. Until 2009 it was part of the headquarters of Dresdner Bank, one of Germany's largest banks until its merger with Commerzbank in 2009. Since at least 2012 and still as of 2021, the main tenant is Deutsche Bahn.

<span class="mw-page-title-main">Westdeutsche Landesbank AG</span> Former German public bank

Westdeutsche Landesbank was a major German bank based in Düsseldorf, mainly controlled by the German state of North Rhine-Westphalia. It was created in 1969 by the merger of two predecessor entities respectively for the Rhineland and Westphalia. As a Landesbank, WestLB's core business was wholesale banking on behalf of the region's Sparkassen, but it expanded into numerous risky activities that ultimately led to its restructuring and dismantlement in the late 2000s. As of 30 June 2012, the residual operations of WestLB were transferred to a legacy non-bank entity, Portigon Financial Services AG.

<span class="mw-page-title-main">Eurohypo</span> Defunct German real estate bank

Hypothekenbank Frankfurt AG, previously Eurohypo AG, was wound down in 2016. Its portfolios were transferred to Commerzbank AG. The banking and pfandbrief licenses were returned and Hypothekenbank Frankfurt AG was transformed into a service company LSF Loan Solutions Frankfurt GmbH.

<span class="mw-page-title-main">IKB Deutsche Industriebank</span>

IKB Deutsche Industriebank AG is a bank headquartered in Düsseldorf, Germany. It was established in 1924 under the name Bank für Industrie-Obligationen. IKB supports medium-sized enterprises in Germany and Europe with loans, risk management, capital market services and advisory services. The online offering for retail banking customers covers overnight and term money, bank savings schemes, bank deposits and selected commercial papers. The bank has six branches in Germany. Single shareholder is the investment company Lone Star.

Landesbank Baden-Württemberg is a universal bank and the Landesbank for some Federal States of Germany. As of 2018, it is Germany's biggest state-backed landesbank lender.

<span class="mw-page-title-main">Klaus-Peter Müller</span>

Klaus-Peter Müller was chairman of the supervisory board of Commerzbank until the annual general meeting on 8 May 2018.

The subprime mortgage crisis impact timeline lists dates relevant to the creation of a United States housing bubble and the 2005 housing bubble burst and the subprime mortgage crisis which developed during 2007 and 2008. It includes United States enactment of government laws and regulations, as well as public and private actions which affected the housing industry and related banking and investment activity. It also notes details of important incidents in the United States, such as bankruptcies and takeovers, and information and statistics about relevant trends. For more information on reverberations of this crisis throughout the global financial system see 2007–2008 financial crisis.

<span class="mw-page-title-main">Allianz</span> German multinational financial services company

Allianz SE is a German multinational financial services company headquartered in Munich, Germany. Its core businesses are insurance and asset management.

<span class="mw-page-title-main">Hamburg Commercial Bank</span>

Hamburg Commercial Bank is a commercial bank in northern Europe with headquarters in Hamburg as well as Kiel, Germany. It is active in corporate and private banking. Considered to be the world’s largest provider of maritime finance, its main focus is on shipping, transportation, real estate and renewable energy. The bank is one of the pioneers in the pan-European project financing of renewable energies and is also involved in the expansion of digital infrastructure.

Martin Blessing is a German banker and business person.

<span class="mw-page-title-main">2007–2008 financial crisis</span> Worldwide economic crisis

The 2007–2008 financial crisis, or the global financial crisis (GFC), was the most severe worldwide economic crisis since the Great Depression. Predatory lending in the form of subprime mortgages targeting low-income homebuyers, excessive risk-taking by global financial institutions, a continuous buildup of toxic assets within banks, and the bursting of the United States housing bubble culminated in a "perfect storm", which led to the Great Recession.

<span class="mw-page-title-main">Comdirect Bank</span> German direct bank

Comdirect Bank Aktiengesellschaft was the third-largest German direct bank and was based in Quickborn, Schleswig-Holstein. Founded by the Commerzbank in 1994, the company went public in 2000. The Commerzbank integrated the company on November 1, 2020.

<span class="mw-page-title-main">Martin Zielke</span> German bank manager (born 1963)

Martin Zielke is a German bank manager who served as chief executive officer and chairman of the board of managing directors of Commerzbank from 2016 until 2020.

References

  1. ↑ "Das traurige Trio: Commerzbank, Dresdner Bank und die Allianz vereint im Absturz". Die Tageszeitung (in German). 2008-11-01. p. 11.
  2. ↑ "Einigung mit Soffin: Rettungsschirm für die Commerzbank ist fertig". Handelsblatt (in German). 2008-12-19. Retrieved 2019-01-01.
  3. ↑ "Weg frei für Staatshilfen: Brüssel und Berlin einigen sich offenbar im Streit über Commerzbank-Hilfen in Höhe von 8,2 Milliarden Euro". Die Tageszeitung (in German). 2008-12-11. p. 9.
  4. ↑ "Rettungsschirm wird für die Commerzbank teurer". Die Welt (in German). 2008-12-22. p. 12.
  5. ↑ "Commerzbank zahlt Dresdner nicht mit Staatsgeld". Die Welt (in German). 2008-12-01. p. 12.
  6. ↑ "Staat soll Kauf der Dresdner Bank finanzieren: Käufer Commerzbank verhandelt mit dem Bankenrettungsfonds Soffin über weitere Staatshilfen". Die Tageszeitung (in German). 2009-01-08. p. 8.
  7. ↑ "Erste Bank in Deutschland wird teilverstaatlicht. Noch eine Nothilfe: Bund gibt Commerzbank zehn Milliarden und bekommt jetzt Stimmrecht. Aktien brechen ein". Die Welt (in German). 2009-01-09. p. 1.
  8. ↑ https://www.mayerbrown.com/public_docs/0272fin_Summary_Government_Interventions_Germany.pdf.{{cite news}}: Missing or empty |title= (help)
  9. ↑ "Aus viel mach wenig: Der Steuerzahler will etwas sehen für die Milliarden, die er der Commerzbank gibt. Soll er auch, sagt deren Chef. Seinen Aktionären erzählt er etwas anderes". Financial Times Deutschland (in German). 2009-01-26. p. 15.
  10. ↑ "Denmark agrees on 13.4-bln-euro line of credit to banks: govt". France 24. 2009. Retrieved 2009-01-19.[ dead link ]
  11. ↑ https://www.bis.org/review/r100325c.pdf.{{cite news}}: Missing or empty |title= (help)
  12. ↑ https://www.nationalbanken.dk/media/vnoelzbg/monetary-history-of-denmark-2005-2020-vol-7.pdf.{{cite news}}: Missing or empty |title= (help)
  13. ↑ "Obama's First Crisis: Dud Banks", The Christian Science Monitor (January 22, 2009)
  14. ↑ Dow Down 50% Since Peak, Major Indices Approach New Lows, 27 Feb 2009, CNBC.com
  15. ↑ "Steep Market Drops Highlight Despair Over Rescue Efforts (Published 2009)". The New York Times . Archived from the original on 2022-04-16.
  16. ↑ BoE cuts rate to 0.5%, embraces 'quantitative easing' Archived 2009-04-16 at the Wayback Machine . Financial Post.
  17. ↑ 45 percent of world's wealth destroyed: Blackstone CEO. Reuters. March 10, 2009.
  18. ↑ World Banks projection of June 22
This page is based on this Wikipedia article
Text is available under the CC BY-SA 4.0 license; additional terms may apply.
Images, videos and audio are available under their respective licenses.