COMMERZBANK AKTIENGESELLSCHAFT

244 Commerzbank Interim Report as of June 30, 2009
The German economy and Mittelstand business in particular
were affected by the drastic decline in demand as
a result of the global recession. The effects are becoming
increasingly visible in our Corporates Germany core portfolio.
Due to credit downgrades for borrowers the negative
trend in rating changes is intensifying. For the next 12 to
18 months we expect further financial restructurings and a
higher rate of insolvencies. As a result risk costs will rise,
thereby placing greater demands on the gross margin.
In the first half of the year the Mittelstandsbank segment
had an EaD of €116bn and a risk density of 45 bp. With an
EaD of €96bn and 83 % of the portfolio, Corporate Banking
in Germany as well as in Western Europe and Asia remained
the segment’s core business. The banks had an EaD share
of €20bn or 17 % of the total portfolio of the Mittelstandsbank
segment.
We will unabatedly continue the risk limitation measures
for new and existing loans already initiated last year (including
higher collateralization levels) with the aim of combating
the negative impact of the economy on our loan portfolio
to the greatest extent possible, but without substantially
reducing our willingness to lend to our target clients. We
will also continue with the forward-looking sector risk
management approach strengthened with the integration
of Dresdner Bank, and rating systems will also be further
developed incorporating the experiences gleaned from the
current financial market crisis.
Due to the weaker economic trend in Western Europe
(in particular in Spain and UK) and Asia we anticipate a
larger volume of negative rating migrations due a deterioration
in individual credit ratings. We are responding to
the expected increase in the number of financial restructurings
and insolvencies – which are likely to lead to a higher
risk density – with a more anticipatory, cash flow-oriented
analysis, as well as by intensifying our proximity to customers.
4. Central and Eastern Europe (CEE)
Exposure at Default
in € bn
Risk density
in bp
Rating breakdown
1.0 – 1.8
2.0 – 2.8
3.0 – 3.8
4.0 – 4.8
5.0 – 5.8
22
49
3 %
70
Central and Eastern Europe 91 bp
7 %
8 %
129
16 BRE Bank
2 CB Eurasija
2 Bank Forum
2 Other
33 %
300
49 %
The EaD level in the CEE segment, which comprises BRE
Bank, Bank Forum, CB Eurasija, CB Budapest and CB Prague,
was actively reduced again in second-quarter 2009 and is
now around €22bn. The depreciation of local currencies
relative to the euro had only a marginal impact on this
reduction. The risk density in the segment rose from 70 bp
in the first quarter to 91 bp. This was attributable to a higher
number of rating downgrades and shrinking collateral
values. We are counteracting the increasing deterioration of
the portfolios by continuing to manage down the weaker
portfolio segments.
In the case of our strategic investment in Bank Forum,
we are actively driving the efforts to develop risk management
processes forward, given the difficult macroeconomic
environment in which the Bank is currently operating.