COMMERZBANK AKTIENGESELLSCHAFT

To our Shareholders Corporate Responsibility Management Report Risk Report Group Financial Statements Further Information 143
87
127 71 Business and overall conditions
135 79 Earnings performance, assets and financial position
147 91 Segment performance
137 193 Our employees
143 199 Report on events after the reporting period
144 200 Outlook and opportunities report
Eurohypo AG took part in the ECB’s tender process for the first time in December 2011.
This was to raise long-term liquidity of €10bn in total for the general funding of existing
business and for making material improvements to Eurohypo’s funding structure. From a
Group perspective, this reduced Commerzbank’s internal refinancing of Eurohypo AG. Overall,
the European banking sector participated by taking up a total volume of €489bn, which
the ECB regarded as a huge success.
Capital market funding structure
as of December 31, 2011
Mortgage Pfandbriefe 22%
Lettres de gage 8%
Public sector Pfandbriefe 23%
Figure 1
about €172bn
Unsecured bonds 42%
Government Guaranteed Bond 3%
Ship Pfandbriefe 2%
Based on its regular financial and monetary analyses, the ECB committee decided to decrease
interest rates by 25 basis points at year-end. It also decided on four further special
measures to counter the mounting sovereign debt crisis and the resulting tighter funding
situation for banks. These measures were designed to guarantee better access to liquidity for
the banking sector and strengthen the functioning of the money market in the eurozone. The
offering included two longer-term refinancing operations, each with a maturity of 36 months
and the option of early repayment after one year. These were conducted as a fixed-rate tender
procedure with full allotment. Another measure resulted in the minimum reserve ratio
being reduced from 2% to 1%. This freed up collateral and therefore supported money market
activities.
Commerzbank was again able at all times to raise the resources required for a balanced
refinancing mix and continued to benefit from a stable deposit base in its Private and Corporate
Customer business throughout the whole year.
This grew in importance given the backdrop of a volatile market environment in 2011.
Credit default swaps and secondary market spreads on unsecured funding widened constantly
over the course of the year (with fluctuations). The escalation of the sovereign debt
crisis in 2011 and the uncertainty thus generated was one of the main drivers of this trend.
As a result, funding spreads were higher than in 2010. For unsecured issues, spreads were
nonetheless continually below Commerzbank’s CDS curve, with Pfandbrief issues generally
offering more favourable terms compared to unsecured refinancing.
Group Management Report