Commerzbank AG announced yesterday that it had reached an agreement with the German government’s Financial Market’s Stabilization Fund (SoFFin) in which SoFFin will provide an additional capital contribution of €10 billion. This injection of funds, in addition to the €8.2 billion provided to Commerzbank by SoFFin in October, will raise the German government’s total non-voting equity stake to 25% plus one share. The agreement for the new funds is currently in the process of EU approval as well.

This action is one of a concerted series of actions taken this week between Commerzbank, Dresdner Bank AG, Allianz SE and SoFFin to strengthen the core capital ratios of Commerzbank in anticipation of Commerzbank’s acquisition of Dresdner Bank from Allianz later this month.