for-phone-onlyfor-tablet-portrait-upfor-tablet-landscape-upfor-desktop-upfor-wide-desktop-up
Money News

Commerzbank in the red after restructuring charges, pandemic provisions

FRANKFURT (Reuters) - Germany’s Commerzbank swung to a third-quarter loss, it said on Thursday, as it dealt with fallout from the coronavirus crisis and continued a restructuring programme.

FILE PHOTO: The headquarters of the Commerzbank is pictured before the bank's annual news conference in Frankfurt, Germany, February 8, 2018. REUTERS/Ralph Orlowski/File Photo

Germany’s No. 2 bank, which is waiting for new chief executive Manfred Knof to take the helm in January before deciding on a new strategy, confirmed earlier warnings that it was on course for a full-year loss.

Its shares had tumbled around 6% by midmorning in Frankfurt after a slightly bigger than expected third-quarter loss. The shares are down around 27% this year.

Finance chief Bettina Orlopp told analysts on a call that the bank would likely book further restructuring costs in the fourth quarter and warned of possible insolvencies by some clients in January.

“We do not expect a tsunami of insolvencies,” she added.

The bank reported a net loss of 69 million euros ($81.12 million) in the third quarter, overturning a net profit of 297 million euros a year earlier. A 62 million euro loss was expected, according to a consensus forecast posted on the bank’s website.

The bank booked a restructuring charge of 201 million euros in the quarter to close 200 branches and offer early retirement to hundreds of employees.

The bank also set aside 272 million euros in provisions for future credit losses, up from 114 million euros a year ago and largely related to the pandemic.

The bank has been considering staff cuts, branch closures and streamlining international operations as part of its overhaul. Orlopp said that the bank would likely make an announcement on further restructuring in the first quarter of next year, and further restructuring costs were expected.

Commerzbank has been under pressure from one of its largest shareholders, the private equity investor Cerberus, to carry out an overhaul.

The bank was left leaderless over the summer when the chief executive and chairman stepped down to give Commerzbank a fresh start.

A new chairman installed Knof, a former top manager at rival Deutsche Bank, as the new CEO. Knof takes up the post in January, and remains on Deutsche’s payroll until then.

($1 = 0.8506 euros)

Reporting by Tom Sims and Hans Seidenstuecker; Editing by Michelle Adair, Edmund Blair and Susan Fenton

for-phone-onlyfor-tablet-portrait-upfor-tablet-landscape-upfor-desktop-upfor-wide-desktop-up