Commerzbank has met European bank stress test requirements early by plugging a €5.3 billion capital gap identified by EBA last year, but Germany's second-largest bank by assets fell short of expectations for its first-quarter earnings.
Commerzbank said it had surpassed a goal of plugging a €5.3 billion capital gap that was identified by the European Banking Authority last year. The bank, which had until the end of June to cover the shortfall, said it exceeded the EBA target by €1.1 billion after measures including a debt swap and cutting the bank’s leverage.
Commerzbank still said it expected a “solid” profit for the full year, but said its results for the first half of the year would be lower than originally planned. “If the operating profit is adjusted for one-off effects, it is at a stable level”, said Stephan Engels, the bank’s new chief financial officer.
Commerzbank did not outline further plans to wind down Eurohypo, which it is required to do by the European Commission as part of an agreement over the bank’s receipt of aid from the German government to survive the financial crisis. Commerzbank said it had cut sovereign exposure to peripheral European countries by €4.7 billion to €12.1 billion, while reducing its commercial real estate exposure – another source of analysts’ concern – by €12 billion to €54 billion.
Risk-weighted assets fell by €14 billion from the end of 2011 to €223 billion, Commerzbank said. The core tier one ratio – a key regulatory measure of the amount of capital underpinning the balance sheet – rose to 11.3 per cent.
The bank said it was prepared for new “Basel III” capital rules to be introduced for banks next year. The bank remains 25 per cent owned by the German government after it needed state aid to absorb Dresdner Bank, which it agreed to take over in August 2008 just as the financial crisis was reaching a critical point with the collapse of Lehman Brothers.
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