COMMERZBANK AKTIENGESELLSCHAFT

Group Management Report
190
134 Commerzbank Annual Report 2011
› Note 44 – Segment reporting
Page 242 ff.
Portfolio Restructuring Unit
The Portfolio Restructuring Unit (PRU) was set up in the third quarter of 2009 as an inde-
pendent unit in response to the worsening financial market crisis. It originally covered several
asset classes, particularly those from investment banking that were linked to discontinued
proprietary trading and investment activities and are no longer classified as strategic. In
2011, the PRU only comprised Structured Credit, as Credit Trading was closed at the end of
2010. The Structured Credit area contains all asset-backed securities (ABS) that do not carry a
state guarantee, but none of our own securitisations. The PRU’s activities are mainly carried
out in London.
Performance
Portfolio Restructuring Unit
2011 2010 Change in
€m
%/%-points
Income before provisions – 62 843 .
Loan loss provisions – 5 – 62 – 91.9
Operating expenses 63 106 – 40.6
Operating profit/loss – 130 675 .
Capital employed 1,002 1,212 – 17.3
Operating return on equity (%) – 13.0 55.7 .
Cost/income ratio in operating business (%) . 12.6 .
Table 8
The performance of the PRU in 2011 was characterised mainly by economy-related market
volatility deriving primarily from the European sovereign debt crisis. Even in this difficult
market environment, the PRU segment successfully continued its strategy of systematic risk
reduction, cutting its portfolio by 16% to €11.9bn at year-end 2011. This reduction was
achieved through natural amortisation, proactive restructuring and taking advantage of market
opportunities. Disposals in the fourth quarter in particular accelerated the reduction in
the portfolio. The PRU’s operating result for 2011 as a whole showed a loss of €–130m,
compared with €675m in 2010.
Income before loan loss provisions showed a loss of €–62m compared with a positive
€843m in the same period of 2010. Interest income was €49m, down from €82m in 2010, reflecting
the smaller size of the portfolio. Trading income saw a large fall, reporting a loss of
€–108m, which, in addition to largely countervailing valuation and realisation effects, was due
to valuation adjustments in respect of the counterparty risk of credit insurers. The 2010 figure
contained positive effects of impairment reversals plus profits from the portfolio reduction.
Loan loss provisions for lending amounted to €5m, compared with €62m in 2010.