Press Release Press Release


November 08, 2012

Commerzbank to invest more than EUR 2.0 billion in its core business until 2016

  • Return on equity after taxes (RoE) in the Core Bank to be more than 10 % by 2016
  • Cost-income ratio (CIR) in the Core Bank to decrease to around 60 %
  • Core Tier 1 ratio to be always substantially higher than 9%, even pursuant to Basel 3 (phase-in)
  • Cost base to remain stable despite investments
  • Portfolios (EaD) in Non-Core Assets (NCA) segment to be reduced by more than 40 % until 2016
  • Blessing: "We want a new bank that unites modern technologies with traditional values."

In the coming years, Commerzbank will adapt its business model to the new framework conditions in the financial sector and will concentrate on focused growth. In the framework of its strategic agenda until 2016, the Bank is investing more than EUR 2.0 billion in the revenues power of its core business. At the same time and due to additional efficiency measures, it is maintaining its costs at a constant level and is further optimising its capital base. In 2016, the Bank intends to achieve a return on equity after taxes (RoE) of more than 10% in its core business. The cost-income ratio (CIR) of the Core Bank with the operating segments Private Customers, Mittelstandsbank, Corporates & Markets, and Central & Eastern Europe is to be lowered to around 60%. Taking into consideration the phase-in of Basel 3, the Core Tier 1 ratio of the Group shall always be comfortably above 9% until the end of 2016. In addition, it is planned to reduce the portfolios in the Non-Core Assets (NCA) segment by more than 40% until 2016 (as of the end of September 2012: EUR 160 billion Exposure at default, EaD).

"There can be no return to 'business as usual' in the banking industry. Regaining the trust of customers will be the most important task for all banks in the coming years. For us this means: we want a new bank that unites modern technologies and traditional values. We are rigorously orienting our business model towards the needs of the real economy, amending our advisory, products and services," said Martin Blessing, Chairman of the Board of Managing Directors of Commerzbank. "We are continuing with our consistent cost management and gradually reducing non-strategic activities further. This gives us the necessary flexibility for focused growth in our core business. In this respect, above all in the Private Customers business we are repositioning ourselves both strategically and operationally. In the future, our customers will receive the products and services of Commerzbank anywhere and at any time. To this end, we are investing approximately one billion euros alone in the development of a modern multi-channel bank and the flexibilisation of our branch network. We will expand our leading position as a long-term partner for our customers and as a reliable lender in the coming years, thus increasing our profitability on a sustainable basis."

Commerzbank is thus reacting to the challenges posed by the financial market and sovereign debt crisis and to the resulting "new normality" in the financial sector - namely tougher requirements for the capital base of banks, ongoing low interest rate levels and a loss of trust on the part of customers. "In past years, we have reduced costs, lowered risks and successfully completed the integration of Dresdner Bank. Now we will consistently adapt our business model and our processes to the changing market conditions. Thus we will have a strong base, which we can utilise for further growth," said Stephan Engels, Chief Financial Officer of Commerzbank.

Above all, the strategic repositioning of the Private Customers business is intended to make a contribution to the increase in revenues. The goal is the development of a multi-channel bank which unites modern technologies with traditional values such as fairness, trust and competence. Until 2016, Commerzbank will invest a total of around EUR 1.0 billion in its platforms, its product and service offering, the advisory process, and the qualification of employees in the Private Customers business. Thus, revenues per customer are to be increased and the number of customers is to be raised from 11 million at present to 12 million, with the generation of an operating profit of approximately EUR 500 million in 2016 (operating profit in the first nine months of 2012: EUR 215 million). The return on equity before taxes (RoE) is then to be more than 12% (RoE in the first nine months of 2012: 7.3%).

Mittelstandsbank will further expand its successful business model and its leading market position. In this respect, growth will focus on the acquisition of new customers, in particular in the small- and medium-sized corporate customers segment, as well as on the expansion of business with existing customers in Germany. Furthermore, the Cash Management & International Business platform is to be further developed. Thus, today's customer coverage of more than 30 % with small- and medium-sized enterprises is to be improved further and the position as the market leader among major companies - the customer coverage here is more than 90 % - is to be secured on a sustainable basis. Business at the existing sites abroad will be further developed, with investment in the expansion of the position as the leading trade service bank in Europe. In total, and also assuming a normalisation of the loan loss provisions, in 2016 a return on equity before taxes (RoE) of more than 20% is still to be attained (RoE as of the end of September 2012 due to reversals in the loan loss provisions: 29.2%). In this respect the cost-income ratio (CIR) is, in a competitor comparison, to remain at a low level of less than 45% (CIR as of the end of September 2012: 44.0%).

Corporates & Markets will strengthen its positioning as a large international niche player and continue to leverage the distribution channels of Commerzbank's private and corporate customers business while maintaining its cautious approach to risk, already introduced in 2004. The unit will continue to build on its traditional strengths in debt capital markets and risk management solutions. It will consolidate its strong European franchise in equity and commodities securitised products through diversification of its offering into selected asset management products. In 2016, Commerzbank intends to generate a return on equity before taxes (RoE) of more than 15 % (RoE in the first nine months of 2012: 11.1 %) in investment banking and lower its cost-income ratio to less than 65 % (CIR in the first nine months of 2012: 76.7 %).

In the Central & Eastern Europe segment Commerzbank will continue its successful organic growth at Poland's BRE Bank, expanding its proven universal bank model and further modernising the direct bank offering of mBank. The mobile banking offering of mBank is to be enlarged and its position as one of the leading internet banks in Europe to be developed. In addition, through the closer interplay of corporate customer business and investment banking BRE Bank will broaden its product offering, consistently orienting this to the Mittelstand. The brand image of the BRE Bank Group is to be standardised under the name mBank by 2016. Central & Eastern Europe is to attain stable growth in its value contribution in the Group, attaining a return on equity before taxes (RoE) of more than 15% (RoE in the first nine months of 2012: 14.7%) and a cost-income ratio of less than 55% (CIR in the first nine months of 2012: 55.8%).

The Public Finance, Commercial Real Estate (CRE) and Deutsche Schiffsbank business divisions bundled in Non-Core Assets (NCA) will be reduced as planned, essentially without any sales and while preserving their value. The goal is to reduce these portfolios, totalling some EUR 160 billion (EaD) at present, by more than 40 % until the end of 2016. As a result of the reduction process, net capital is to be released in the NCA segment and to be reallocated to the Core Bank segments. The job cuts planned at NCA will be implemented in line with the portfolio reduction.

Despite the focused growth in the core business, the loan loss provisions in the Group are to be further reduced to some EUR 1.4 billion by 2016 (loan loss provision in 2012 probably at EUR 1.7 billion). The risk-weighted assets (RWA) are likely to rise arithmetically to around EUR 240 billion by 2016. This is essentially due to the implementation of the new equity capital regulations pursuant to Basel 3 (RWA as of the end of September 2012: EUR 206 billion). With a view to the new equity capital regulations pursuant to Basel 3 and against the background of the changing market environment, the focus will continue to be on strengthening the equity capital. The payment of dividends for 2012 and 2013 is unlikely from the current stance.

In the reduction of costs Commerzbank has already achieved a great deal in past years. As announced, the Bank will realise the cost synergies from the integration of Dresdner Bank to the full amount of EUR 2.4 billion. Since the end of 2009, the operating expenses have been lowered by some EUR 2.0 billion, to a probable sum of EUR 7.2 billion as of the end of 2012 (minus 20 %). Thus, the Bank has more than fulfilled its costs target for 2012 announced in 2009 (expenses less than EUR 8.0 billion). In 2016, the cost base will be at around EUR 7.1 billion to EUR 7.3 billion despite the investments in the core business, higher wage settlements and rising factor prices. To this end the Bank will continue its strict cost management and save costs in the coming years through more efficient design of processes, the launch of the new branch structure, and the adjustment of personnel capacities. For this, restructuring expenses will incur.

In accordance with its clear strategic orientation along the needs of its customers in its core markets Germany and Poland, Commerzbank is also redesigning its international branding. The current brand promise "Achieving more together" is to be replaced by "Commerzbank. The Bank at your side". "Thus, we are underlining the positioning of Commerzbank as a fair and competent bank strictly oriented to the needs of its customers," said the Chairman of the Board of Managing Directors, Martin Blessing.


Press contact:
Armin Guhl +49 69 136 42764
Simon Steiner +49 69 136 46646
Simone Fuchs +49 69 136 44910


About Commerzbank

Commerzbank is a leading bank in Germany and Poland. It is also present worldwide in all markets for its customers as a partner to the business world. With the business areas Private Customers, Mittel-standsbank, Corporates & Markets and Central & Eastern Europe, it offers its private and corporate clients as well as institutional investors the banking and capital market services they need. With some 1,200 branches Commerzbank has one of the densest branch networks among German private banks. In total, Commerzbank boasts nearly 15 million private customers, as well as 1 million business and corporate clients. In 2011, it generated revenues of just under EUR 10 billion with some 58,000 employees.



This release contains statements concerning the expected future business of Commerzbank, efficiency gains and expected synergies, expected growth prospects and other opportunities for an increase in value of the company as well as expected future net income per share, restructuring costs and other financial developments and information. These forward-looking statements are based on the management's current expectations, estimates and projections. They are subject to a number of assumptions and involve known and unknown risks, uncertainties and other factors that may cause actual results and developments to differ materially from any future results and developments expressed or implied by such forward-looking statements. Commerzbank has no obligation to periodically update or release any revisions to the forward-looking statements contained in this release to reflect events or circumstances after the date of this release.