Capital Group sold major stakes in Deutsche Bank AG and Commerzbank AG, causing shares in both to plummet, according to a report by The Wall Street Journal on Tuesday.

  • Capital Group sold nearly 5% stakes in both banks, generating proceeds of nearly €1.75 billion, equal to $1.9 billion. Morgan Stanley organized the sales. The shares were offered at around 7% discounts on their prior trading levels.
  • Capital Group increased its stakes in both banks in 2020 when the global economy was struggling, then rebounded from Covid-19 lockdowns.
  • Russia’s invasion of Ukraine has hampered Germany’s economic outlook, increasing the possibility of a major slowdown in growth combined with high energy prices and inflation, prospects that could hurt bank earnings.

Both banks have revealed limited exposure to Russia, but Germany’s dependence on Russia’s oil and gas has increased questions about the strength of the economy. DB down -0.50%, CRZBY down -3.58%