German bank Commerzbank on Thursday said it will raise up to around €650m in new capital by exchanging hybrid bonds for new shares, resulting in a capital gain and an increase to its core tier-one ratio.

The move is the latest by a European bank to boost its capital ratios in advance of stricter regulatory requirements. The bank has been considering a capital increase for about a year, but hadn't been able to make an outright sale of new shares because of its depressed share price.