FRANKFURT, Nov 8 (Reuters) - Commerzbank, Germany’s No.2 bank, has reduced its insurance against a break-up of the euro zone, Chief Executive Martin Blessing said at an investors’ day on Thursday.
“We thought it makes no sense to pay insurance”, Blessing said, adding the bank deems a euro zone breakup as increasing unlikely.
Commerzbank said it has shed most of its holdings in so-called credit default swaps (CDS) against a sovereign default of peripheral euro zone countries.
Earlier this year when the Greek crisis escalated, Commerzbank said it had prepared an emergency plan in case of a Greek default and a break-up of the euro zone.
At the time Blessing said: “It would be unwise to assume there is a 100 percent likelihood the euro zone will prevail.”
After selling all of its Greek sovereign bond holdings, Commerzbank now has 8.6 billion euros in Italian, 2.4 billion euros in Spanish and 0.8 billion euros in Portuguese government bonds on its books.
CFO Stephan Engels said it would be wrong to sell these sovereign bond holdings immediately, taking substantial losses into account. (Reporting by Arno Schuetze and Edward Taylor; Editing by David Holmes)