Commerz hit by Dresdner merger costs
COSTS associated with absorbing rival Dresdner Bank pushed losses at Germany’s Commerzbank to €1.05bn (£947m) in the third quarter.
Germany’s second biggest bank reported a €900m charge in relation to the acquisition of Dresdner and €650m in writedowns associated with its Eurohypo real estate unit.
Eurohypo is being slimmed down by Commerzbank ahead of a planned sale of the struggling division.
The bank was forced to agree a sale of the real estate lender by 2013 as a condition for having about €18bn in bailout money approved by the European Commission.
Unlike rival Deutsche Bank, which benefited from its much larger investment banking arm during the quarter, Commerzbank faces losses for the rest of the year as it seeks to repay parts of a bailout and reshape its business.
Banking analysts had been expecting a net third quarter loss in the region of €700m but earnings at the operating level were considered surprisingly strong.
Impairment gains on toxic assets at its portfolio restructuring unit helped Commerzbank post an operating profit of €120m, better than the €94m loss expected by the market.
Commerzbank declined to specify the level of impairment gains during the quarter or describe how they would be booked, leaving some analysts scratching their heads.
“We expected Commerzbank to post an operating profit. But it’s difficult to make statements about the quality of those earnings as we have no details on, for instance, the loan provisions,” said Thomas Stoegner at Oppenheim Research.
Frankfurt-based Commerzbank, which only survived the credit crunch by accessing €18.2bn in capital from the German state, said the bank’s core capital ratio was just under 11 per cent at the end of September.