Commerzbank reveals plans to shrink size of operations
Bank's Irish subsidiary generated €3bn in business but focus remains on deleveraging
Published 27/04/2011 | 05:00
Germany's second largest bank, Commerzbank, is generating €3bn of business through its Irish subsidiary annually, but now plans to shrink the bank's size and deleverage.
Commerzbank Europe (Ireland) lends to "highly rated clients'' and also does derivatives from an office in Dublin. It actually made a loss of €3.87m in 2010 after taking hits on its US exposures and a loss on assets originating in Iceland.
According to the bank's director's report, "total business volume amounted to €3bn" in 2010, a decline of €1.2bn or 28pc on the previous year.
"It is the intention of the group to continue its focus on deleveraging the balance sheet in 2011," said the accounts.
The bank was founded in 1994 and has a banking licence from the Irish Central Bank. The bank is believed to be Germany's second biggest lender.
"The group is well capitalised, which is aided by the current deleveraging strategy,'' said the bank.
The bank had total shareholders' funds of €369m, compared with €373m in the previous year, the drop explained by higher impairment charges.
Commerzbank is in the middle of a major capital-raising exercise. Last week, it emerged that the bank might have to sell new shares at little over half of their market value, which would result in a heavy dilution of existing shares.
The bank is also raising debt that can convert into equity in certain circumstances.
The bank wants to repay €14.3bn of the €16.2bn the State injected into the bank during the financial crisis. This will help free it from government controls, such as a cap on bonuses.
In results in February, the bank rebounded from heavy losses suffered during the global economic crisis as it posted a solid 2010 profit and promised to start paying back state aid.
Commerzbank said it made a net profit of €1.43bn last year, compared with a loss of €4.5bn in 2009.
In the fourth quarter of 2010, the partially state-owned bank recorded a net profit of €257m, turning around a loss of €1.9bn in the same period a year earlier.
"The year 2010 was a successful year for Commerzbank in many respects," chairman Martin Blessing said, adding that the group had returned to profitability one year earlier than forecast.
The German government took a stake of 25pc in the bank during the financial crisis.