Commerzbank spends €976m on restructuring plan

In order to improve its position, the German bank - which lost €2.9m (£2.4m) in 2020 - has spent €976m (£830m) on a restructuring plan. Agreeing the plan with its employees in May, Strategy 2024 aims to return the firm to a positive operating profit in 2021.

As part of this restructuring process the firm will be closing 190 branches in 2021, with it also looking to reduce its headcount by more than 80% by the end of 2023. By the end of 2024, the firm aims to have an operating profit of €2.7bn (£2.2bn).

Based on its latest result, the firm has recorded a revenue increase in the first half of 2021 when compared to the first half of 2020 - going from €4.1m (£3.4) to €4.3m (£3.6m). The German bank also recorded an operating profit of €570m (£485m) in the first half of 2021 - an increase when compared to the €74m (£62m) loss it reported in the first half of 2020.

In order to boost its finances, CommerzVentures - the venture-capital fund of Commerzbank - delivered a positive contribution of around €100m (£85m). A further €42m (£35m) came from targeted longer-term refinancing operations from the European Central Bank.

According to the firm, negative contributions came in particular from provisions of €66m (£56m) for the judgement of the Federal Court of Justice relating to price adjustment measures in the private customers’ business.

The risk result was minus €87m (£74m) in the second quarter of 2021. This was significantly lower year-on-year, with the result in the second quarter of 2020 being minus €469m (£399m).

The firm’s total costs for the first six months of 2021, meanwhile, amounted to €3.5m (£2.9m) - higher than the €3.4m (£2.8m) it spent in the first half of 2020, while the compulsory contributions of €375m (£319m) remained virtually unchanged. Alongside this, the firm was able to reduce its operating costs by €56m £47m) in the first half of 2021.

Its chief executive Manfred Knof described the firm’s first half result as “solid”. He added: “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.”

Commerzbank’s chief financial officer Bettina Orlopp added: “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.”

The firm says its revenues in 2021 should slightly exceed the previous year’s results, with the bank targeting an operational cost of around €6.5bn (£5.5bn) for the year. It also anticipates a risk result of less than €1bn (£850m) based on current observations. Overall, it expects a positive operating result.