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If you discover that our solutions are not available to you, we encourage you to advocate at your university for a best-in-class learning experience that will help you long after you've completed your degree. We apologize for any inconvenience this may cause. Germany's Commerzbank AG will need to keep a close eye on costs and capital management if it is to complete its strategic restructuring by as originally planned while also battling the effects of the COVID pandemic, according to analysts.
Its Commerzbank 5. But it has canceled the mBank sale amid concerns it would be unable to fetch an attractive price due to worsened market conditions. This leaves it short of funding for the overhaul which, together with other negative effects of the pandemic on asset quality and profits, could delay the restructuring at a time when it also faces pressure from regulators to cut more costs, according to analysts.
Commerzbank cut both its capital and profit targets for when it released its first-quarter earnings results May Owing to lowered regulatory requirements, it also cut its common equity Tier 1 ratio target to The bank has made progress de-risking its portfolio, an important part of which was selling off most of its shipping book. Its ratio of nonperforming loans to loans at amortized cost has remained at a little over 1.
But its efforts to cut costs have been criticized. Under Commerzbank 5. Commerzbank then launched a second cost-reduction program in February, details of which will be released with second-quarter figures Aug.
Commerzbank plunges to loss as pandemic thwarts recovery
Nevertheless, U. Although economically sensible, the decision to keep mBank will make it harder for Commerzbank to complete its restructuring in time and hit all financial targets, Fitch Ratings said in a May 15 report. In a note following the cancellation of the sale, Morgan Stanley equity analyst Izabel Dobreva said there is a risk the restructuring could be knocked off course by COVID Given its focus on digitization, it could shutter more than the branches already planned for closure, Fitch said.
The most likely route, according to Dobreva, is cutting risk-weighted assets, or RWAs, in its international corporates division by refocusing the business on Germany, which would lead to capital gains and higher profits. Rating agency Moody's welcomed the decision to keep the lucrative Polish subsidiary, but said short-term restructuring costs would constrain its ability to generate capital in the coming few years.
Commerzbank plans to free up CET1 capital through issuing additional Tier 1 and Tier 2 instruments to keep its ratio above the The year-old bank, which is still partially owned by the state after a bailout during the last financial crisis, warned that its target for turning a profit in now seems "very ambitious".
Chief executive Martin Zielke said the bank faces a difficult market environment for the foreseeable future and is focusing on additional cost cuts. The bank reported a net loss of million euros The quarterly numbers came in worse than a consensus forecast for a million euro loss.
It said that the impact of measures to control the coronavirus hit earnings by million euros in the quarter, and it expects charges for credit losses of between 1 billion and 1. Provisions for credit losses in the quarter were million euros, compared with 78 million euros a year ago. The bank said it was difficult to provide an outlook for the full year, but assuming a gradual recovery after a two-month lockdown in Germany, and no second lockdown, Commerzbank will keep revenue in its customer business "largely stable" this year.
Commerzbank, the second-largest listed lender in Germany, is now looking for further cost cuts as it restructures after a failed attempt to merge with Deutsche. It has hired consultants to identify possible cuts, which may include further trims to its branch network. Finance Home. News Market Data.
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Commerzbank swings to loss amid coronavirus hit
Who What Wear. PA Media: Money. Yahoo News UK. PA Media: Tech. The Guardian. The Telegraph. PA Media: Video.PK were losing around 5 percent in the morning trading in Germany after the banking major reported Wednesday a loss in its first quarter, compared to prior year's profit, hurt mainly by impacts from coronavirus or Covid pandemic.
Revenues declined, while net interest income increased with strong customer business. Looking ahead, the Bank expects to keep revenues in customer business largely stable in the financial yearexcluding the influence of non-recurring and valuation effects.
The outlook assumes that the economy will gradually gain momentum after a lockdown lasting around two months and that there is no second lockdown. Further, the company said it will intensify cost management even more this year, and targets to achieve a cost base on the level of now also including IT investments of up to 0.
The current CET1 ratio is The Bank also said it has decided to not pursue the sale of the Polish mBank, citing the current market distortions and its own strong capital position. Bettina Orlopp, Chief Financial Officer of Commerzbank, said, "Thanks to the far-reaching measures adopted by the Federal Government, we anticipate that German companies, which make up the lion's share of our business, will come through the crisis comparatively well.
We have a healthy loan book and the proportion of impaired loans has been below the average for Germany and Europe for many years now. We will therefore be able to cushion additional effects resulting from the pandemic. For the first quarter, net loss attributable to shareholders was million euros, compared to last year's profit of million euros. The pre-tax result was loss of million euros, compared to profit of million euros last year.
It includes extraordinary proceeds from the EMC sale. The operating loss was million euros, compared to profit of million euros a year ago. The latest results included million euros negative impact from the pandemic.
Excluding Covid impact, operating profit would be million euros.
Revenues declined to 1. However, the company reported good development in customer business. Net interest income went up by in excess of 7 percent, and net commission income grew by more than 14 percent on the back of an excellent securities business. Find News.Stefan Wittmann, who represents labour on the supervisory board and is an official at Germany's Verdi union, also criticized top investor Cerberus's demands for seats on the supervisory board and other changes at Commerzbank, put forward last week.
Cerberus wants two board seats as well as cost cuts and a strategy shift at Germany's second-biggest bank. Commerzbank has already rejected the demand for the board seats. Commerzbank, which last year announced plans to cut thousands of jobs, is currently in the process of identifying more cost cuts and will announce plans when it releases second quarter earnings in August. Last year the bank said it would cut the number of branches to around from 1, It also said it would cut 4, jobs in some places but add 2, jobs in "strategic areas", a net fall of 2, full-time positions, equivalent to about 5.
The bank, which is still partially owned by the state after a bailout during the last financial crisis, warned last month that its target for turning a profit in now seems "very ambitious" after it made a loss in the first quarter as the impact of the coronavirus pandemic drove up loan loss provisions. In a letter on Friday to Cerberus, Commerzbank's supervisory board rejected the investor's demands for the board seats. The outright rejection of Cerberus' No.
A person close to Cerberus said: "Next steps to come". Protesters asked to leave or risk arrest after Portland Police Association office is set ablaze. Commerzbank preparing to make more job cuts: board member.
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Send MSN Feedback. How can we improve? Please give an overall site rating:. Privacy Statement.The issuer is solely responsible for the content of this announcement. Temporary valuation effects exerted a negative impact here along with a higher risk provision booked on account of the pandemic. In spite of the coronavirus effects, the Common Equity Tier 1 ratio at The Bank has made considerable progress on this front. The complete takeover of comdirect is in the final straight, after a resolution on the squeeze-out under merger law was passed at the Annual General Meeting of comdirect.
Meanwhile, the Bank has decided to not pursue the sale of the Polish mBank in the light of current market distortions and its own strong capital position. With the outbreak of the pandemic, Commerzbank implemented a range of different measures directed towards safeguarding stable and secure business, and providing support for clients. Since the beginning of May, the Bank has adopted a step-by-step approach to opening further branches.
All the self-service zones are open. Overall, more than 18, financing and information enquiries relating to the crisis were received from corporate clients and small business customers. At the same time, user figures reached record values for digital offerings. The upward trajectory of customer growth continued with the Bank acquiring around 10, new customers on average each week in the first quarter primarily through online channels. The coronavirus pandemic is putting the world and our economic system under a severe strain.
We have not seen a comparable crisis since World War II. The banks have a key role to play in overcoming this crisis by providing liquidity and thereby helping their customers to get through these difficult times. Group revenues benefited from good customer business during the first quarter. This was due to the high level of market volatility. When markets stabilise, the valuations of these derivatives are likely to recover. Effective cost management was the most important contributing factor here along with advances in personnel reduction.
At the end of March, the number of full-time employees in the Group stood at 39, a reduction of around 1, by comparison with the year-earlier figure. As announced, the Bank launched a new phased part-time retirement programme in April as part of the strategy 'Commerzbank 5.
The reason for this was the significantly higher European bank levy, which was reported in full during the first quarter. This takes account of the charges that are currently foreseeable and of the comprehensive government aid programmes. Overall, the loan book continued to be healthy with a low ratio of non-performing loans of 0.
It includes extraordinary proceeds from the EMC sale. The leverage ratio was 4. We will therefore be able to cushion additional effects resulting from the pandemic. At the same time, we will intensify our cost management even more this year. This is because cost efficiency and powerful digital structures are absolutely essential particularly during the current period. Furthermore, despite the restrictions caused by the coronavirus, the segment acquired a net increase ofcustomers in Germany especially on the basis of online acquisitions.DJ Commerzbank: Strong customer business in the first quarter of - Effects of coronavirus weigh on earnings.
Nachrichten Nachrichten Nachrichten auf FN. Alle News. Rubriken Aktien im Blickpunkt. Ad hoc-Mitteilungen. Bestbewertete News. Meistgelesene News. Konjunktur- und Wirtschaftsnews. Alle Aktienempfehlungen. Erweiterte Suche. Indizes Indexliste. Erneuerbare Energien. Sonstige Technologie. Watchlist Watchlist anlegen. Was bringt eine Nachrichten-Watchlist? Sonntag, Ad hoc-Mitteilungen :. FN als Startseite. Realtime Geld Brief Zeit 4, 4, Dow Jones News Artikel bewerten:.In addition to posing significant public health concerns, the coronavirus crisis is causing considerable strain on businesses in Europe and globally — causing severe near-term liquidity challenges as well as longer-term uncertainties.
Insights speaks to Roland Boekhout, the Board Member responsible for Corporate Clients at Commerzbank, to outline the rapid financial support made available to German corporates, and the current position for international corporates amid the outbreak.
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The situation came with little warning and its impact continues to vary from sector to sector. Some travel-related businesses, transportation and leisure companies for instance, have seen revenue streams stop abruptly, whereas some others, while experiencing reduced revenues, can largely continue to operate as before.
Roland Boekhout : The state has been remarkably swift in providing strong support to corporates and freelancers. Our current focus is on providing loans and support in bridging near-term liquidity shortfalls.
We have also made available several additional measures for our clients on a case-by-case basis. These include the extension of credit lines, the introduction of repayment holidays, near-term liquidity solutions serving as a bridge until KfW support has been cleared, as well as temporary suspensions of loan covenants.
Insights: How has the bank made the application process as accessible as possible? Roland Boekhout : Throughout the current situation, we understand that timely advice and promptly delivered financial support are absolutely critical.
So far we have received over 18, loan enquiries. We now have specialists dedicated solely to processing KfW loans, and have given additional training to our team of around corporate client advisors on the coronavirus-related state subsidies and other support available.
Our experts already have ample expertise and experience of such programmes: as a leading German bank for the Mittelstand, we have, for many decades, cooperated with KfW and other development banks.
Implementing these initiatives so rapidly required a Herculean effort across various teams: Corporate Clients, Risk Management, as well as back-office departments. Insights: How does the current crisis impact your commitment to corporate clients? Roland Boekhout : As a leading financier of the Mittelstand as well as corporates across Europe and beyond, we are fully committed to our clients.
Through previous spells of uncertainty, we have been the trusted partner at the side of our clients — wherever they need us. Things are no different today. Of course, we remain prudent: not all the support we can offer is fully state-subsidised and remains subject to risk assessments. Nevertheless, many of our client relationships — both in Germany and internationally — span decades. Your personal advisor can support you as your first point of contact. In order to provide increased availability, we will make increased use of telephone, video and WebEx conferences to be there for you.
We have also taken the necessary precautionary measures to ensure that our worldwide business operations continue to run smoothly.