Commerzbank's capital raising looks disastrous for its deferred bonuses

If you work in banking and you're worried about the implications of banks' capital requirements on your deferred stock bonus, don't look at what's going on at Commerzbank.

Commerzbank is raising a total of €11bn through a complex rights issue - starting Wednesday.

Why this is bad for Commerzbank employees ...

Commerzbank's capital quest looks dangerously dilutive for its existing shares. Alphaville quotes analysts at Landesbank Baden-Württemberg, who say the number of shares could rise from 1.33bn to 4.3bn- 4.9bn.

Today, Commerzbank's share price is up, marginally. Longer term it could clearly fall. This is not good if you can't sell your stock for three years.

Mitigating factors

The good news is that a cap on compensation of €500k max is being lifted as Commerzbank repays its loan to the German government.

From now on, therefore, Commerzbank will be free to pay salaries and bonuses as it sees fit. Whether it will proceed generously is open to question, however.