COMMERZBANK AKTIENGESELLSCHAFT

248 Commerzbank Interim Report as of June 30, 2009
The volume of corporate loans in the CRE segment – the
loans unsecured by mortgages that are extended on large
real estate portfolios (such as REITS and funds) against
financial covenants or share pledges – was €3.9bn as at the
reporting date (March 2009: €4.1bn). As before, the focus is
on the US (€2.4bn). Following the decision to concentrate
solely on real estate financing in future, all corporate loans
have now been categorized as discontinued business. The
portfolio is being managed down gradually.
b) Shipping
With the financial market crisis spilling over into the global
real economy, conditions for the maritime transport industry
have also deteriorated severely. The situation has been
exacerbated by the increasing deliveries of newbuildings
into the market while cargo volumes have fallen, leading to
substantial losses for liner companies. Economic stimulus
packages (infrastructure measures) introduced around the
world and increasing cancellations / postponements of
newbuilding orders have only been able to partially cushion
the effect, leading to uneven performance across the main
segments of the shipping industry during the reporting
period.
Exposure at Default
in € bn
Risk density
in bp
23
24
Shipping 118 bp
76
7 Container
6 Tanker
5 Bulker
1 Offshore
1 Shipyards / shipping companies
4 Other
93
98
147
171
Exposure at default (EaD) for ship- and shipyard- and
shipping company financing, taking the loan portfolio of
Deutsche Schiffsbank AG (80 % subsidiary) fully into
account, was €24bn as at the reporting date. The decrease
of €1.8bn compared with the previous quarter is mainly due
to currency effects. In addition, some loans were removed
from the portfolio owing to order cancellations in the bulker
segment. The breakdown of the overall portfolio by asset
class is largely unchanged compared with the previous
quarter, with loans distributed across standard asset classes
with the main focus on container ships (29 %), tankers
(25 %) and bulkers (20 %).
Owing to movements in freight / charter rates and market
values, the investment grade share in the performing portfolio
fell significantly in the first half of the year to its current
rate of 44 % as per PD ratings (compared with 57 % as
at December 2008). Although a wide range of measures
have already been taken to limit risks, we are expecting a
further rise in substandard and problem loans, particularly
in the container ship segment.
The continued – and in places drastic – fall in market
rates and ship values is still the main factor driving the
increase in risk densities and loan-to-value ratios (LtVs). In
the bulker and tanker segments, LtVs are still modest for the
most part. In the container ship segment, LtVs are mainly in
the region of 80 %.
In view of the current market environment, we are focusing
primarily on portfolio management, mainly concentrating
our efforts on reducing risks. We are paying particular attention
here to loans that are not secured by long-term charter
contracts and, in the case of predelivery financing, on open
fundraising risks. Here, measures such as capital injections
from initiators / limited partners using the limited liquidity
still available, the contribution of public sector funds, in
some cases with indemnity agreements, sellers credit of
shipyards and additional collateral have enabled us to create
improvements.
7. Charges against earnings
Conditions for some segments of the financial markets
eased in the second quarter. Market-sensitive positions
benefited from the improved conditions, and as a result
charges against earnings fell significantly quarter-onquarter,
down from around €2bn to around €1.1bn. However,
it would be premature to assume a lasting trend
reversal at this point. There is still the potential for
prices to fall and spreads to widen on negative news flow,
leading to a fresh fall in values. In contrast with other