Commerzbank Aktiengesellschaft - CMVM

30 MANAGEMENT REPORT
Corporate Banking
department
2003
Equity tied-up (7 m) 5,154
Operative return
on equity 6.9%
Cost/income ratio in
operating business 49.8%
corporate and investment banking
The Corporate and Investment Banking division is responsible for business relationships
with companies and institutions as well as the product and trading
areas geared to these groups of customers.
Strategically, the systematic development of business with the successful
German Mittelstand continues to be of outstanding significance for us. We
intend to become Germany’s best nationwide bank for Mittelstand companies.
At the same time, we want to be the partner of choice for our larger corporates
and multinationals, able to provide them with the right solutions.
Corporate Banking department
In view of the flat economic performance in Germany for the third year in succession
and a further rise in company insolvencies, the overall conditions for
corporate business remained difficult in 2003. They were felt above all in persistently
weak demand for financing, primarily reflected at the Bank in a decline
in our lending to larger corporates and multinationals. While provisioning for
problem credits is still at a high level, we were able to reduce the valuation
allowances in our lending by altogether more than a fifth, not least thanks to
the acknowledged efficiency and state-of-the-art character of our systems for
managing risk.
We attach great priority to reflecting risk in our pricing, which in any case will
become obligatory at the latest with the introduction of Basel II. Margins in corporate
business remain narrow and do not adequately reflect the risk. Alongside
these efforts, we have stepped up our cross-selling in order to sell more of our
other banking products and services and we are intensifying the dialogue with
our customers.
Lending offensive for Mittelstand
In order to underscore our Mittelstand orientation and to counter the frequently
and indiscriminately raised accusation that the private-sector banks are no
longer lending to Mittelstand firms, we launched a lending offensive last spring
especially designed for this group of customers. In a first step, we made available
an extra one billion euros in funds. Shortly afterwards, we were able to
arrange a global loan of 7500m with Kreditanstalt für Wiederaufbau for financing
the investments of smaller businesses. In addition, we made available – for
the first time at individual state level – a global loan of 7250m with L-Bank
Baden-Württemberg especially for companies in this state. A third general loan
facility of 7100m for firms in Bavaria was arranged with LFA Förderbank Bayern.
We pass on the funding advantage realized through these general loan facilities
to our Mittelstand borrowers. All told, we provided almost 72bn from these programmes
alone for the new business of smaller firms, thereby holding our lending
to Mittelstand companies steady against the general trend – in marked contrast
to popular talk of a credit squeeze.