Commerzbank sells Hungarian subsidiary to Erste Bank
Contract signed for sale of Commerzbank Zrt. to Erste Group’s Hungary Zrt.
Commerzbank and Erste Group reach cooperation agreement for accompanying corporate customers in selected Central and Southeastern European countries
CEO Manfred Knof: “We are consistently aligning our international network with the needs of our core customers.”
Commerzbank AG will sell its 100% subsidiary Commerzbank Zrt. to Erste Bank Hungary Zrt. Both banks signed a contract to this effect today. As part of its “Strategy 2024”, Commerzbank announced in February that it would adjust its foreign presence. “We are consistently aligning our international network with the needs of our core customers and are focussing on international businesses with reference to Germany. We will continue to be the strong international banking partner in the most important trade corridors of the German economy but will need fewer own locations than before,” Chairman of the Board of Managing Directors of Commerzbank Manfred Knof explained.
The transaction in Hungary is still subject to the approval of the antitrust and banking supervisory authorities. It has been agreed to not disclose the purchase price. The closing of the sale and thus the start of the operative implementation of the transaction is planned for the second half of 2022. At the same time, a comprehensive cooperation agreement signed between Commerzbank and Erste Group will also enter into force. With this partnership, Commerzbank will be able to offer its corporate customers easy access to selected markets in Central and Southeastern Europe via its cooperation partner Erste Group. Commerzbank will remain present in Eastern Europe with its own locations in Poland, the Czech Republic, and Russia.
Focus on costumer orientation
Commerzbank Zrt., based in Budapest, was founded in 1993 as one of the first subsidiaries of West German banks in Hungary. Over the course of its almost 30-year history, the Hungarian subsidiary of Commerzbank has successfully established itself in the market with a comprehensive range of products for corporate clients. In addition to international customers, the Commerzbank subsidiary serves Hungarian SMEs and large customers with a team of about 100 employees. The main income is generated by the credit and trade finance and currency business. The bank is profitable and total assets amounted to approximately HUF400 billion (approximately €1 billion) in 2020.
Michael Kotzbauer, Member of the Board of Managing Directors responsible for the Business Segment Corporate Clients, said: “With the sale, we are becoming more efficient and with the cooperation agreement, we will continue to guarantee our customers access to the Hungarian market via Erste Group.” Kotzbauer further emphasised: “We are sure that with Erste Bank Hungary Zrt., we have found a buyer who is close to us in terms of culture, offers convincing products and services for our customers, and with whom we can execute a smooth transition for everyone involved in a cooperative manner.”
Erste Bank Hungary covers the entire spectrum of financial services. Measured by the number of customers, branches, and ATMs, it ranks among the top three banks in Hungary. Erste Bank Hungary has been a member of Erste Group, one of the largest providers of financial services in the eastern part of the EU, since 1997.
Bernd Spalt, Chief Executive Officer of Erste Group: “This acquisition is an important step for our corporate business in Hungary and perfectly complements our existing customer base in this segment. In addition, it will allow our clients to benefit from the excellent product knowledge, especially in fields of cash management and trade finance, that Commerzbank’s strong track record in Hungary ensures. Coming on the back of our purchase of the Hungarian online broker Random Capital earlier this year, this newest acquisition marks a further step in our pursuit of a targeted growth strategy in Central and Eastern Europe.”
Streamlining of foreign network progressing
For Commerzbank, the sale of its Hungarian subsidiary is a further step to the strategic streamlining of its presence abroad. The Bank plans on exiting 15 foreign locations by 2024. In Europe, these are the offices in Barcelona, Bratislava, Brussels, and Luxembourg, and, in Asia, Hong Kong. The Dubai office will continue as a representative office in the future. In addition, the network of international correspondent banks will be reduced from around 1,600 to around 1,300. The Bank had initially expected to pull out of 3 locations in the current year.
In the first nine months, however, the locations in Baku, Belgrade, Kuala Lumpur, and Jakarta have already been closed. With its presence in almost 40 countries in the future, the Bank remains present wherever it is important for its customers.
Commerzbank: Προσδοκίες ότι η Ελλάδα θα επανέλθει στην επενδυτική διαβάθμιση το 2022
H αναβάθμιση του αξιόχρεου της Ελλάδας από τον οίκο πιστοληπτικής αξιολόγησης DBRS θα ενισχύσει τις προσδοκίες για επάνοδο της χώρας σε επενδυτική διαβάθμιση το επόμενο έτος, δήλωσε αναλυτής της Commerzbank στο Reuters.
«Η αναβάθμιση της Ελλάδας, σε συνδυασμό με τις θετικές προοπτικές, από την DBRS αναμένεται να τροφοδοτήσουν τις προσδοκίες για μία επάνοδο στην επενδυτική διαβάθμιση το επόμενο έτος» δήλωσε ο Ράινερ Γκούντερμαν.
Η Ευρωπαϊκή Κεντρική Τράπεζα (ΕΚΤ) συμπεριέλαβε κατ’ εξαίρεση πέρυσι τα ελληνικά ομόλογα στο έκτακτο πρόγραμμα αγορών τίτλων λόγω της πανδημίας. Όταν λήξει το πρόγραμμα αυτό το επόμενο έτος, η συμπερίληψη των ελληνικών ομολόγων στο τακτικό πρόγραμμα της ΕΚΤ απαιτεί τουλάχιστον μία επενδυτική διαβάθμιση (από έναν από τους μεγάλους οίκους αξιολόγησης που λαμβάνει υπόψη η ΕΚΤ).
Αυτό μπορεί να γίνει, πρόσθεσε ο αναλυτής της Commerzbank, το νωρίτερο το επόμενο φθινόπωρο, καθώς η Ελλάδα πρέπει να διασφαλίσει μία αναβάθμιση δύο βαθμίδων από έναν από τρεις οίκους αξιολόγησης.
Η DBRS αναβάθμισε την Ελλάδα την Παρασκευή στη βαθμίδα ΒΒ, δύο βαθμίδες χαμηλότερα από την επενδυτική διαβάθμιση, με θετικές προοπτικές, κάτι που σημαίνει ότι είναι πιθανή μία περαιτέρω αναβάθμιση.
Οι αποδόσεις των ομολόγων της Ευρωζώνης μειώθηκαν σήμερα καθώς η εξασθένιση των τιμών των εμπορευμάτων, οι ανησυχίες για την κινεζική εταιρεία ακινήτων Evergrande και η επιφυλακτικότητα εν όψει της συνεδρίασης της κεντρικής τράπεζας των ΗΠΑ αυτή την εβδομάδα άσκησαν πιέσεις στις μετοχές και ενίσχυσαν τα ασφαλή κρατικά ομόλογα παγκοσμίως.
Η απόδοση των γερμανικών 19ετών ομολόγων υποχώρησε 3 μονάδες βάσης στο -0,31%, ενώ οι αποδόσεις των άλλων 10ετών ομολόγων της Ευρωζώνης σημείωσαν πτώση 1-3 μ.β.
«Είναι καλύτερα να έχεις επενδύσει σε κρατικά ομόλογα παρά μετοχές και άλλα πιο ριψοκίνδυνα στοιχεία ενεργητικού, αυτό είναι που βλέπουμε σήμερα» δήλωσε αναλυτής της DZ Bank.
«Κανείς δεν γνωρίζει πραγματικά αν αυτή είναι μία κρίση στην Κίνα που διαλύεται γρήγορα ή η αρχή για κάτι μεγαλύτερο» πρόσθεσε, αναφερόμενος στο θέμα της Evergrande. «Οι επενδυτές ανησυχούν και για το τι θα σημαίνει η πίεση στην Evergrande για την κινεζική οικονομία και τις προοπτικές της» πρόσθεσε.
Commerzbank pursues ambitious sustainability targets
Credit and investment portfolio to become “net zero” by 2050 at latest, own banking operations by 2040 at latest
Sustainable business volume to be tripled to 300 billion euros by 2025
Coal portfolio already cut by 50% to around 1 billion euros within two years, extended directive on fossil fuels to come into force on 1 January 2022
Measuring of carbon footprint of loan and investment portfolio in preparation, concrete reduction targets to be defined by August 2022
Manfred Knof: “We want to contribute to channelling more capital into sustainable economic activities in order to mitigate the consequences of climate change.”
Commerzbank pursues ambitious cornerstones for its sustainability strategy. The core of the sustainability agenda is the commitment to “net zero”. “We are expressly committed to the Paris Climate Agreement. That is why we have committed ourselves to reducing the CO2 emissions of our entire credit and investment portfolio to net zero by 2050 at the latest,” emphasised Manfred Knof, Chairman of the Board of Managing Directors. “We want to contribute to channelling more capital into sustainable economic activities in order to mitigate the consequences of climate change. Our most important goal is therefore to support our clients in their transformation into sustainably operating companies.” To this end, the Bank will mobilise around 300 billion euros by 2025. This corresponds to a tripling of the sustainable business volume compared to the end of 2020. “As a bank, we are financiers of the green transformation,” said Knof. “Hence, sustainability becomes a fundamental pillar of our business model.”
Sustainable business volume to be tripled to 300 billion euros by 2025Commerzbank has made transparent which products are included in the sustainable business volume in its “Sustainable Finance Framework”, which was published in April 2021. In the corporate client business, this includes, inter alia, the support of sustainability-related syndicated loans and promissory note loans as well as issues of sustainability-related bonds. In the private client business, asset management and green mortgages are to be contributing to the growth of the sustainable business volume.
Coal portfolio halved to around 1 billion euros within two yearsCommerzbank has had a binding coal policy since 2016. Among other things, it stipulates that the Bank shall not finance any new coal-fired power plants or coal mines. In the past two years alone, the Bank’s coal exposure has been halved to around 1 billion euros. This corresponds to about 0.2 per cent of the total portfolio. The Bank is currently working on expanding the policy to include gas and oil. It is to come into force on 1 January 2022.
Measurement of carbon footprint of loan and investment portfolio in preparationThe Bank will define specific CO2 reduction targets for the entire loan and investment portfolio by August 2022 in accordance with the requirements of the “Science-based Targets Initiative”. The initiative provides a scientifically sound methodology for measuring CO2 intensity. Commerzbank already joined a year ago, so far the only German bank among more than 50 European companies in the financial sector to do so.
The Bank is currently working on making the carbon footprint of its loan portfolio measurable and deriving measures that are necessary to achieve the climate targets. In a first step, it is focussing on CO2-intensive sectors such as energy production. Initial test calculations show that a reduction in CO2 intensity by more than 50 per cent will be necessary in this portfolio by 2030 in order to achieve the preliminary goals of the Paris Climate Agreement. An even higher reduction will be required for “net zero”. For the energy sector, the Bank intends to define concrete CO2 targets as early as by the end of the current year.
With regard to its own banking operations, Commerzbank aims to reduce CO2 emissions to net zero by 2040 at the latest. Since 2007, it has reduced its own CO2 emissions by 70 per cent, and its banking operations have been climate-neutral in Germany since 2015. By 2025, Commerzbank also aims at cutting the CO2 emissions by a further 30 per cent which corresponds to around 36,000 tonnes of CO2. Key measures to achieve this include the increasing restriction of flights for business appointments and the further energy-efficient refurbishment of real estate.
Regular dialogue forums ensure transparency of progress in sustainabilityBy launching the new online event “Sustainability Dialogue”, the Bank will regularly report on its sustainability activities in the future. Viewers can participate directly in the virtual exchange by posing questions. “We want to make our progress in sustainability transparent. To this end, we are seeking continuous dialogue with interested stakeholders, from which we expect valuable impetus,” said Bettina Storck, Head of Group Sustainability Management. The first “Sustainability Dialogue” – which addressed the Bank’s sustainability agenda – took place today, 17 September 2021, with Chief Executive Officer Manfred Knof, Member of the Board of Managing Directors responsible for the Business Segment Corporate Clients, Michael Kotzbauer, and Chief Risk Officer Marcus Chromik.
Commerzbank strengthens Board of Managing Directors – newly formed Board Team set to take Commerzbank into a successful future
Supervisory Board appoints Thomas Schaufler as Board Member for Private and Small-Business Customers
Dr Jörg Oliveri del Castillo-Schulz is appointed new Chief Operating Officer
Jörg Hessenmüller will leave the Bank by the end of the year
At the meeting of 15 September 2021, the Supervisory Board of Commerzbank made personnel decisions in order to establish the Board Team for the far-reaching transformation that has been set in train in the context of Strategy 2024.
Thomas Schaufler, currently Board Member for Retail Banking at Erste Group Bank AG in Austria, will take responsibility for Private and Small-Business Customers at Commerzbank on 1 January 2022. Currently, Sabine Schmittroth is responsible for this segment. The appointment of Thomas Schaufler to the Board of Managing Directors is still subject to the usual approval by the regulatory authority.
As already announced in June, Sabine Schmittroth will return to focusing fully on her role as Labour Relations Director. As part of the transformation and the associated implementation in human resources, this function is particularly important.
The Supervisory Board has also appointed Dr Jörg Oliveri del Castillo-Schulz as the new COO on the Board of Managing Directors. The appointment of Jörg Oliveri del Castillo-Schulz is still subject to the usual approval by the regulatory authority. Once this approval has been granted, he will succeed Jörg Hessenmüller, whose appointment as Member of the Board of Managing Directors at Commerzbank will end at the latest on 31 December 2021. Jörg Hessenmüller offered his resignation with the aim of giving the Bank the opportunity for a new beginning.
The Chairman of the Supervisory Board, Helmut Gottschalk, commented as follows on the new appointments: “The newly formed Board Team combines a long track record of management experience with great depth of specialist expertise and furthermore secures the necessary focus for implementing Strategy 2024.”
CEO Manfred Knof added: “The task now is to develop our full potential as a team and to consistently transform Commerzbank further – to become THE digital advisory bank in Germany, which stands for customer centricity, sustainability and profitability.”
Since January 2021, Thomas Schaufler has been Board Member with responsibility for Retail Banking at Erste Group Bank AG in Austria and Board Member of Erste Bank der österreichischen Sparkassen AG. Thomas Schaufler joined Erste Group already in 1997 and since then he has held various management positions in retail banking. In February 2016, he was appointed as Board Member of Erste Bank der österreichischen Sparkassen AG, where he is responsible for retail business, business with small businesses and independent advisors, private banking, asset management, marketing and product management. Thomas Schaufler is a Certificated European Financial Analyst and obtained a master’s degree at the University of Applied Sciences for Management & Communication.
Dr Jörg Oliveri del Castillo-Schulz is currently an independent consultant for strategy and transformation projects. As COO and CHRO, he was most recently responsible for the areas of IT, digitalisation, operations, sourcing and human resources as Board Member of IKB Deutsche Industriebank AG from 2016 to 2020. Jörg Oliveri del Castillo-Schulz is a business economist, he took a Master of Business Administration at Edinburgh University Management School and obtained his doctorate at the University of Edinburgh, UK. His professional career took him to various board and senior management positions at institutions including Deutsche Bank and at other financial services providers in Germany, Europe and the United Kingdom, where he was responsible for the transformation of business and operating models, companies also at national level, and for restructuring projects, sourcing activities and services.
Jörg Hessenmüller has driven forward the digital transformation of Commerzbank with great commitment. The technical and cultural initiatives were particularly important and these enabled him to give his board division a new profile. The agile cluster/delivery organisation “Campus 2.0” created by him received significant accolades throughout the sector.
Chairman of the Supervisory Board, Helmut Gottschalk commented: “We would like to thank Jörg Hessenmüller for his commitment as a Board Member and for his many years of cooperation at the Bank, with broadly-based management responsibility. We would like to wish him all the best for the future.”
Commerzbank achieves operating result of €570m in first half year – transformation making good progress
Revenues in first half year of €4.35bn (H1 2020: €4.12bn) reflect robust customer business
Low risk result of minus €235m in H1 2021 (H1 2020: minus €795m)
H1 operating result at €570m (H1 2020: minus €74m)
Net result of minus €394m (H1 2020: minus €107m) includes restructuring charges in the amount of €976m for “Strategy 2024”
Strong Common Equity Tier 1 ratio of 13.4%
In the second quarter, Commerzbank again generated a positive operating result and achieved a solid operating profit of €570 million in the first half of the year. The Bank benefited from a robust customer business and a low risk result. This contrasted with high one-time charges in the second quarter. Despite these exceptional effects and the booking of a further €511 million restructuring expenses in the second quarter, the Common Equity Tier 1 ratio (CET 1 ratio) remained strong at 13.4% and is even more significantly above the regulatory requirement (MDA).
On the journey to a sustainably more profitable bank, Commerzbank reached further milestones. The business model of the digital advisory bank is beginning to gather pace with the initiated launch of the remote advisory centres and the accelerated adjustment of the branch network. Furthermore, the selection process for the future second management level was concluded on schedule, and the voluntary programme for personnel reduction announced this spring got underway successfully. In line with the requirements of the German Federal Court of Justice, the Bank has also started to actively obtain the consent of their customers relating to price adjustments.
The Bank made further progress on digitalisation. Customers of Commerzbank are now able to conclude securities savings plans in the banking app directly with their smartphone alongside with the purchase and sale of traditional securities. Since the second quarter, foreign currency transactions have also been possible in the Cash Management App, the mobile assistant for Corporate Clients and Small-Business Customers.
The high level of customer orientation of the Bank is reflected in the sustained good customer feedback. All customer groups are very satisfied with the advisory services and the banking apps provided by the Bank.
The Bank is proceeding at pace in relation to its sustainability targets. The planned increase in the volume for sustainable financial products to €300 billion by 2025 at the latest has made good progress. The volume already increased to €141 billion in the first six months. The Bank has further set ambitious targets for its operating segments. The Corporate Clients segment is projected to contribute €200 billion and to thereby support the transformation of its customers. The Private and Small-Business Customers segment will deliver €100 billion in the form of sustainable product offerings.
“We have achieved a solid operating result in the first half of the year. The implementation of the strategy is right on track. We are driving all strategic initiatives forward and we are also ready to make tough decisions if necessary,” said Manfred Knof, Chief Executive Officer of Commerzbank.
In the second quarter of the year, Commerzbank generated revenues of €1,862 million (Q2 2020: €2,273 million). The year-on-year increase in underlying net commission income by more than 7% to €852 million (Q2 2020: €792 million) had a positive effect. Underlying net interest income remained nearly unchanged at €1,139 million compared with the first quarter thanks not least to the increased volume of priced deposits. The high one-time effects had an impact on revenues in the second quarter. CommerzVentures, the venture-capital fund of Commerzbank, delivered a positive contribution of around €100 million. A further €42 million came from Targeted Longer-Term Refinancing Operations (TLTRO) of the European Central Bank (ECB). Negative contributions came in particular from provisions of €66 million for the judgement of the Federal Court of Justice relating to price adjustment measures in the Private Customers business as well as provisions of further €55 million for the Swiss francs loan portfolio of mBank. Additional negative impacts resulted from ending the project of outsourcing securities settlement.
The risk result was minus €87 million and is therefore significantly lower year-on-year (Q2 2020: minus €469 million). The loan portfolio remained stable despite the ongoing coronavirus pandemic. This is also illustrated by the continuing low ratio of the non-performing exposure (NPE ratio) at 0.8% (end of March 2021: 0.9%). The additional provision booked last year for coronavirus effects anticipated for 2021 (“top-level adjustment”) was unchanged at €495 million at the end of June compared with the previous quarter.
Total costs in the first six months amounted to €3,548 million (H1 2020: €3,403 million). While compulsory contributions at €375 million remained virtually unchanged, the Bank was able to reduce operating costs by €56 million in the first half year. As announced, an exceptional write-off for ending the outsourcing project for securities settlement amounted to €200 million.
Total operating profit in the second quarter amounted to €32 million (Q2 2020: €205 million). Excluding one-off effects, the underlying operating profit was at €208 million. The consolidated profit attributable to Commerzbank shareholders amounted to minus €527 million (Q2 2020: €183 million). Without the booked restructuring expenses of €511 million, Commerzbank would have achieved a virtually balanced net result.
The CET 1 ratio recorded at the end of June 2021 was 13.4% despite the consolidated loss (end of March 2021: 13.4%). The buffer to the regulatory requirement (MDA threshold) of currently 9.4% increased to around 400 basis points due to the AT 1 issuance in June this year.
“In the second quarter, we have kept our Common Equity Tier 1 ratio stable despite the high one-time write-off and restructuring expenses. This again proves that we have a very strong basis for the transformation, and it demonstrates that we are also able to deal with exceptional charges on our way to a sustainably profitable future,” said Bettina Orlopp, Chief Financial Officer of Commerzbank.
Development of the segments
The Private and Small-Business Customers segment continued its growth trajectory with loans and securities. The year-on-year volume in Germany increased by more than 20% to a total of €319 billion. The primary driver for this development was the securities volume, which increased by a further €11 billion compared with the previous quarter. Out of this, €3 billion were new net money. Thanks to the strong mortgage business, the loan volume also posted an increase of more than €1 billion to €116 billion since the last reporting period. The segment made additional progress with the introduction of deposit pricing, with which the Bank responds to the sustained negative interest environment. The volume of priced deposits rose by €3 billion to €13 billion in the second quarter. Total underlying revenues for the Private and Small-Business segment increased slightly to €1,200 million despite the sustained pressure on the deposit business and the consumer restraint on consumption as a result of the coronavirus pandemic (Q2 2020: €1,190 million). Net commission income in the segment rose by 14% on the back of the strong securities business. Despite the provision of €66 million for the judgement rendered by the Federal Court of Justice as well as provisions of €55 million for the Swiss francs loan portfolio of mBank, the segment generated an operating profit of €138 million (Q2 2020: €108 million). The segment benefited from the low risk result in the amount of minus €62 million (Q2 2020: minus €152).
In the Corporate Clients segment underlying revenues slightly decreased to €758 million compared to the second quarter of last year which was defined by a strong capital market business (Q2 2020: €793 million). The Mittelstand division benefited from a slight increase in loan volumes. The International Corporates and Institutionals divisions reflect normalised capital market business and the strategic focus on capital-efficient business. Overall, the segment generated an operating profit of €244 million (Q2 2020: minus €91 million). In addition to lower costs, the main driver for this result was the positive risk result of plus €13 million (Q2 2020: minus €290 million).
Outlook
Given the strong H1 results, revenues in 2021 should slightly exceed the previous year’s. With the further progress of the transformation, the Bank targets operational costs of around €6.5 billion. Additional is the one-time write-off of €200 million. While uncertainty about the further development of the coronavirus pandemic remains, the Bank is now anticipating a risk result of less than
€1 billion based on current observations. Overall, the Bank expects a positive operating result. On the basis of the first half year results, a CET 1 ratio of around 13% is likely – well above the targeted buffer of 200 to 250 basis points above the MDA. The expectations are based on the assumption that there is no fundamental change affecting the Swiss francs loan portfolio at mBank.
Commerzbank retains securities settlement in-house – outsourcing project stopped
Commerzbank’s Board of Managing Directors decided to end the project for outsourcing securities settlement to HSBC Transaction Services GmbH with immediate effect. The reasons for the decision are technical implementation risks and changed market conditions. Due to the project stop, the Bank is anticipating an exceptional write-off of around €200 million in the second quarter of 2021. The write-off will not impact the liquidity or the Common Equity Tier 1 (CET1) capital of the Bank. Furthermore, provisions in the double-digit millions will be set aside.
This year’s cost target of €6.5 billion remains valid in operational terms. However, the expenses for the exceptional write-off come in addition.
With this step, Commerzbank reduces complexity in its transformation and will firstly continue to modernise its own system landscape. The IT delivery organisation of Commerzbank introduced two years ago will make an important contribution to this. As part of its strategy 2024, the Bank has created a dedicated Key Area for Securities & Brokerage.
Since the launch of the outsourcing project in 2017, the market and technological environment have undergone substantial change. “After careful consideration, we have taken the decision to stop the outsourcing project owing to the high implementation risks. The significant growth in trading volume and the ongoing technological development are allowing us to continue securities settlement profitably,” commented COO Jörg Hessenmüller.
The transfer of positions to the systems of the subsidiary company of HSBC planned for the middle of 2021 will not be carried out. Master data already transferred and tax statements relating to securities business are to be transferred back to Commerzbank by the beginning of 2022. Client business will not be affected by this.
Commerzbank and partners execute live transactions on the ‘Marco Polo’ trade finance network
Commerzbank successfully executed two live transactions to secure payments for commercial transactions based on blockchain technology
Key milestone for the market launch of Marco Polo Payment Commitment
In May 2021, Commerzbank joined with İşbank and LBBW to become one of the first banks to execute commercial transactions with German and Turkish corporate clients via the Marco Polo trade finance network in a live environment. The purpose of these transactions was to establish an irrevocable payment commitment to the supplier, issued by the buyer’s bank.
With these live transactions, Commerzbank has reached a key milestone in the run-up to the market launch of Marco Polo Payment Commitment. The data required to establish the payment commitments for both transactions was exchanged in a digital format via the Marco Polo trade finance network, using Corda blockchain technology.
The first cross-border transaction took place on 10 May 2021, in cooperation with İşbank, between corporates Kuraray Europe GmbH and Şişecam. The underlying commercial transaction involved the export of laminated special glass interlayers from Germany to Turkey. The payment by open account has been replaced by an irrevocable payment undertaking with digital exchange and matching of trade data.
The second transaction – the ‘go-live’ in Commerzbank’s home market of Germany, followed on 20 May 2021, in cooperation with LBBW and between KSB and Voith. The underlying transaction was the purchase of special couplings. As with Commerzbank’s first live transaction, the data transfers required to secure payments between the pump and valve manufacturer KSB and the technology group Voith, as well as the credit institutions involved, were performed in a secure and closed area with access only permitted to the parties involved in the transaction.
A Marco Polo Payment Commitment is an irrevocable, abstract undertaking by the buyer’s bank to the supplier to make payment on the due date. The payment commitment is based on the exchange and successful automatic matching of digital trade data in the DLT/blockchain network, thus providing financing options.
Nikolaus Giesbert, Divisional Board member Transaction Banking at Commerzbank AG, said: “Our clients are looking for innovative supply chain management solutions. Commerzbank is focusing on speed and transparency in this area, where blockchain applications have tremendous potential. This transaction is a major step towards market launch.”
“KSB is an international digitalisation pioneer in our sector, and has set standards with many innovative solutions,” said Dr Stephan Timmermann, KSB Management Spokesman. Dr Matthias Schmitz, Managing Director responsible for Finance and Procurement, added: “After digitalising our production and products wherever possible, we are now systematically approaching digitalisation of our processes. The Marco Polo platform, and technologies such as blockchain and distributed ledger, are allowing us to raise our trading processes to a new, paper-free, and – most importantly – secure level.”
“Following our pilot transaction in 2020, we were thrilled to carry out a first live transaction using the Marco Polo platform. Having automated and digitalised most of our internal processes over recent years, the Marco Polo network is the perfect match for our digitalisation strategy. With Commerzbank, İşbank and Şişecam, we have joined forces with valuable business partners to pave the way for digitalisation of one of the last remaining paper-based processes – documentary payments“, emphasised Juliane Löbig, Director Finance & Accounting at Kuraray Europe GmbH.
“Live payment commitment transactions involving KSB, Kuraray, Şişecam and Voith, and Marco Polo member banks Commerzbank, İşbank and LBBW are proof that digital end-to-end settlement processes with a high degree of automation and an electronic data exchange are possible, and will become a reality in trade finance“, noted Daniel Cotti, Managing Director, Centre of Excellence Banking & Trade at TradeIX.
As a founding member of the Marco Polo initiative, Commerzbank – together with LBBW and Turkey’s İşbank – was one of the first banks to settle Marco Polo Payment Commitments for live commercial transactions digitally via Marco Polo’s distributed-ledger technology (DLT) network. The network, operated by the FinTech TradeIX, is built on R3’s Corda blockchain technology.
Commerzbank Annual General Meeting: New Supervisory Board members elected
Supervisory Board elects Helmut Gottschalk as Chairman
Gottschalk: “I want to make a contribution to returning this tradition-rich bank to success”
Actions of the Board of Managing Directors and the Supervisory Board ratified
At Tuesday’s virtual Annual General Meeting (AGM), Commerzbank shareholders elected Helmut Gottschalk, Burkhard Keese, Daniela Mattheus, Caroline Seifert, and Frank Westhoff by a large majority to the Bank’s Supervisory Board, as proposed. The duration of the appointments will run until the end of the 2023 AGM. At a Supervisory Board meeting immediately following the AGM, Helmut Gottschalk was re-elected as Chairman of the Board. He had previously been appointed as a member of the Supervisory Board by court order in April 2021 and had afterwards been elected as Chairman of the Supervisory Board by the members. This mandate ended at the close of today’s AGM.
“I will devote all my commitment, professional experience, and energy to Commerzbank. I want to make a contribution to bringing this tradition-rich bank back to success,” said Gottschalk. He succeeds Hans-Jörg Vetter, who resigned from his post on 16 March 2021 for health reasons. “On behalf of the entire Supervisory Board, I would like to express my sincere thanks for Mr. Vetter’s great commitment and the important impetus he has provided. We wish him all the best and much strength,” Gottschalk said during the AGM.
The further changes to the Bank’s 20-member Supervisory Board had become necessary after Andreas Schmitz resigned his mandate on 24 March 2021, and Tobias Guldimann, Rainer Hillebrand, and Victoria Ossadnik resigned their mandates at the end of the AGM.
“We are tackling the transformation of Commerzbank quickly and decisively. Our ‘Strategy 2024’ stands for customer orientation, digitalisation, sustainability, and profitability,” said Manfred Knof, Chairman of the Board of Managing Directors since the beginning of this year, in his speech to the shareholders. “We have clearly outlined the structures needed and we have taken the first steps. We will do everything we can to make Commerzbank efficient and sustainably profitable again. We want to become the digital advisory bank in Germany. I will not let up until we reach our goal, since the German economy, the German Mittelstand, and our retail customers need a strong, reliable, and independent Commerzbank.”
Due to the ongoing coronavirus pandemic, Commerzbank’s AGM was again held as a virtual event this year. Shareholders voted on the key items on the agenda as follows:
Ratification of actions (items 2 and 3)
The AGM ratified the Board of Managing Directors’ actions as well as the Supervisory Board’s actions with a majority of 99.4% and 86.9% respectively.
Election of the auditors (items 4 and 5)
Moreover, the AGM cleared the way for the planned change of the auditor. For the fiscal year 2021, EY was elected as auditor for the last time with 99.5%. For any interim financial statements in the period after 31 December 2021 until the AGM in 2022, the shareholders elected KPMG as the new auditor with 99.9%. It is planned that the AGM in 2022 will then also elect KPMG as the new auditor for the full fiscal year 2022.
Election of new Supervisory Board members (item 6)
With a large majority of more than 99% Helmut Gottschalk (Former Chairman of the Supervisory Board of DZ Bank), Burkhard Keese (Chief Financial Officer, Lloyd’s of London), Daniela Mattheus (Attorney-at-law, Governance Advisor), Caroline Seifert (Management Consultant for Transformation), and Frank Westhoff (Former Member of the Board of Managing Directors of DZ Bank) were elected to the Supervisory Board of Commerzbank.
Agreement on profit transfer agreement with CommerzVentures GmbH (item 7)
The AGM approved the profit transfer agreement with CommerzVentures GmbH concluded on 1 March 2021 between Commerzbank Aktiengesellschaft (as parent company) and CommerzVentures GmbH (as subsidiary) (99.7%).
Commerzbank with strong results in the first quarter – transformation successfully started
Revenues in Q1 increased by 35% to €2.49bn (Q1 2020: €1.85bn)
Low risk result of minus €149m (Q1 2020: minus €326m)
Strong operating result of €538m (Q1 2020: minus €278m)
Net result of €133m (Q1 2020: minus €291m) despite restructuring charges of €465m
Common Equity Tier 1 ratio improved to 13.4%
Full year outlook raised after good start into the year
Agreement reached with employee representatives for personnel reduction
Ambitious sustainability goals defined
Commerzbank made a very good start into the current year and generated a positive net result in the first quarter despite the ongoing pandemic and restructuring charges. Net commission income increased strongly thanks to a flourishing securities business. This enabled the Bank to largely compensate the impact from the negative interest-rate environment and the ongoing lower consumption resulting from coronavirus restrictions. In conjunction with stable expenses and a lower risk result, this led to an operating profit of €538 million. The Common Equity Tier 1 (CET 1) ratio of the Bank improved to 13.4% and continues to be significantly above the regulatory requirement (MDA). Following on from the positive start of the year, the Bank raised its full year outlook for revenues and the CET 1 ratio.
The transformation of Commerzbank launched in February through “Strategy 2024” is making good progress with the four core topics of profitability, sustainability, digitalisation, and customer centricity.
As already announced, the Bank quickly reached agreements with the employee representatives in Germany about a framework settlement of interests and a framework social plan concerning the necessary personnel reduction. The binding agreements form the basis for a maximally socially responsible downsizing. The Bank had already agreed a voluntary redundancy programme on a headcount reduction of 1,700 full-time equivalents for 2021.
The Bank is also proceeding quickly with the issue of sustainability and has defined ambitious goals for this area. It intends to increase the volume for sustainable financial products from the recent total of around €100 billion to €300 billion by the end of 2025. Furthermore, Commerzbank is one of the first German financial institutions to have made a commitment as a member of the Net-Zero Banking Alliance to reduce CO2 emissions as far as possible and to achieve net-zero CO2 emissions for the entire loan and investment portfolio by 2050, and for its own banking operations already by 2040.
Commerzbank is also making good progress on its digital offerings and in the area of customer centricity. Together with Deutsche Börse, it is investing in the fintech 360X as part of a strategic partnership. The goal is to develop new blockchain-based digital marketplaces and ecosystems for existing real asset classes such as art and real estate. The Bank also agreed a comprehensive cooperation for Equity Brokerage and Equity Research with Oddo BHF. Commerzbank is thereby reducing costs and complexity while improving the customer offer. Alongside market-leading stock analysis in the German-speaking regions of Germany, Austria, and Switzerland, customers will also receive even better access to European equity markets in future.
“After only a few months, we have already achieved some important milestones in our transformation and launched a large number of projects and measures in all parts of the Group. We are now consistently implementing these projects. The agreement with the employee representatives on the framework for the necessary headcount reduction is a decisive step,” commented Manfred Knof, Chief Executive Officer of Commerzbank. “After a very good start into the year, we are looking confidently to the future despite of the ongoing pandemic.”
Revenues in the first quarter increased by 35% to €2,492 million (Q1 2020: €1,851 million) primarily on the basis of a strong net commission income and positive valuation effects. The interest rate benefit from the Targeted Longer-Term Refinancing Operations (TLTRO) of the European Central Bank (ECB) amounted to €126 million in the first quarter. The underlying revenues excluding exceptional items rose to €2,308 million (Q1 2020: €2,024 million). This enabled the Bank to more than compensate the pressure of the negative interest-rate environment on net interest income.
The risk result at minus €149 million was below the year-on-year value (Q1 2020: minus €326 million). Despite of the ongoing coronavirus pandemic, the loan portfolio remained stable. This is also reflected by the continuing low ratio of non-performing exposures (NPE ratio) at 0.9% (year-end 2020: 1.0%). The additional provision formed last year for coronavirus effects anticipated for 2021 (“top-level adjustment”) was nearly unchanged at €495 million at the end of March.
Operating costs fell to €1,469 million (Q1 2020: €1,503 million). Administrative expenses benefited from lower spending for advertising, depreciation, and travel. The burden of compulsory contributions continued to rise by almost 12% to €336 million (Q1 2020: €301 million) as a result of higher contributions for the deposit guarantee scheme and for the European Bank Levy. Despite this additional burden, total expenses were at €1,806 million (Q1 2020: €1,804 million) and thus remained stable overall.
Total operating profit amounted to a strong €538 million (Q1 2020: minus €278 million). This more than compensated for the restructuring charges of €465 million booked in the first quarter. The consolidated profit attributable to Commerzbank shareholders amounted to €133 million (Q1 2020: minus €291 million) partly due to positive tax effects.
The CET 1 ratio increased to 13.4% by the end of March (end of December 2020: 13.2%) and is now around 380 basis points above the regulatory requirement (MDA) of currently 9.6%.
“We started the year with very strong results, and we have achieved a positive net result after restructuring charges. In particular, the strong securities business made a significant contribution to this result, and this enabled us to largely compensate for the effects arising from the negative interest-rate environment. Our improved capital ratio provides us with a solid basis for the further transformation,” said Bettina Orlopp, Chief Financial Officer at Commerzbank.
Development of the segments
The Private and Small-Business Customers segment continued its growth with loans and securities and increased the volume of its business in Germany to €307 billion by the end of March – a plus of €17 billion by comparison with year-end 2020 and €67 billion year-on-year. This was primarily due to strong securities business with an increase in volume of €15 billion since the beginning of the year. Out of this, €5 billion was net new money. Since the turn of the year, the loan volume went up by €2.4 billion to around €115 billion. Once again, the driver for this growth was successful mortgage business, which increased year-on-year by 7% to a volume of nearly €88 billion.
Total underlying revenues for the Private and Small-Business segment amounted to €1,338 million (Q1 2020: €1,329 million), despite of sustained pressure on net interest income. Owing to the securities business, net commission income increased by more than 11%. This enabled the segment to compensate for falling contributions from deposits, lower demand for consumer loans due to the pandemic, and the effect of the lockdown on payment transactions. Net interest income fell by around 10% due to the continuing negative interest-rate environment. Thanks to the significantly lower risk result, the segment generated an operating profit of €250 million (Q1 2020: €146 million).
The Corporate Clients segment maintained almost stable underlying revenues at €824 million (Q1 2020: €833 million) thanks to strong capital market business which enabled the segment to compensate the pandemic-related decrease in lending business. The International Corporates division benefited from improved bond and syndicated loan business, while lower demand for loans had an impact in the Mittelstand division. The effects of the coronavirus crisis led to lower transaction banking in the Institutionals division. Including exceptional items and valuation effects, total revenues for the segment increased by more than 11% to €842 million (Q1 2020: €755 million).
A low risk result of minus €52 million (Q1 2020: minus €165 million) and a further reduction in costs led to a positive operating result for the segment of €98 million (Q1 2020: minus €112 million).
Outlook
Given the strong results of the first quarter, revenues should slightly exceed the previous year. With the further progress of the transformation the Bank targets costs of around €6.5 billion. While uncertainty of the further development of the pandemic remains, a risk result in the range from minus €0.8 billion to minus €1.2 billion is anticipated. Based on current observations, a risk result up to minus €1 billion is likely. Based on the results of the first quarter, the Bank expects a CET 1 ratio of at least 12.5% – well above the targeted buffer of 200 to 250 basis points above the MDA. Overall, Commerzbank expects a positive operating result. The expectations are based on the assumption that there is no fundamental change affecting the Swiss francs loan portfolio at mBank.
Commerzbank: Πέτυχε συμφωνία για την περικοπή χιλιάδων θέσεων εργασίας
Σε συμφωνία με τους εκπροσώπους των εργαζομένων της ήρθε η Commerzbank, η οποία ανοίγει τον δρόμο ώστε η γερμανική τράπεζα να περικόψει χιλιάδες θέσεις εργασίας παγκοσμίως.
Η συμφωνία είναι κρίσιμης σημασίας για τα σχέδια του διευθύνοντος συμβούλου της τράπεζας να εξορθολογίσει τη δεύτερη μεγαλύτερη εισηγμένη τράπεζα της χώρας και να την επιστρέψει στην κερδοφορία.