Deutsche Bank’s chairman Rolf Breuer said yesterday that DB is not interested in the government’s 60% stake in KB. DB had been considered as one of the “heavy-weight” potential buyers of KB, and Breuer’s statement is therefore taken in the market as negative for the bank. On the other hand, Bank Austria Creditanstalt, which is merging with Hypovereinsbank of Germany, said yesterday it could be interested in KB. Also, Bankgesselschaft Berlin (BGB) indicated possible interest in KB.
Moreover, KB chairman Radovan Vavra for the first time explicitly said that this year’s KB loss could be as much as CZK 3 bil., owing to higher provisioning. The chairman had previously spoken of an approximate CZK 1 bil. loss. A larger loss became inevitable after the bank’s in-depth audit revealed the need for higher provisions (CZK 9.6 bil.). Vavra also said that forthcoming government guarantees would not have a positive impact on KB’s profits (which is a view we largely share). This did not help the stock yesterday — KB finished 3.5% weaker for the day, at CZK 850. Despite the recent losses, we continue to consider the stock vulnerable in the short term, given too-high expectations by some on the market regarding the beneficial effect of possible government guarantees on KB’s value.