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FRANKFURT (Reuters) - Just a week after starting operations, Commerzbank's new chief executive on Friday wrote off € 1.5 billion ($ 1.84 billion) of goodwill from a German bank and raised provisions on risks related to the coronavirus pandemic.
Shares in Germany's second-largest bank fell 3% after the announcement of new CEO Manfred Knof, which was seen as an indicator that Commerzbank will suffer bigger losses than analysts expected.
Commerzbank is working on a strategy update under Knof's leadership to boost profitability, and the new CEO warned the bank needed a "fundamental transformation."
According to Commerzbank, the goodwill was written off “due to deteriorating market parameters,” including low interest rates in the euro area and Poland, where it is present.
“With this clearing of the balance sheet, we are well prepared for the journey ahead,” Knof said in a statement. "Our goal is to make the bank more profitable in the long term."
Commerzbank has increased its reserves for risks associated with the coronavirus pandemic to at least € 1.7 billion, up from a previous forecast of € 1.3-1.5 billion.
The increase takes into account the impact of a second lockdown currently taking place in Germany, the report said.
“By increasing our risk outcome, we are responding to the ongoing corona pandemic and feel well prepared for further developments,” said CFO Bettina Orlopp.
Commerzbank said last week that it will undertake a € 610 million restructuring in the fourth quarter following an agreement with staff on previously announced job cuts.
Analysts had expected Commerzbank to post a loss of more than € 300 million for 2020 when it is due to report profit on February 11.
(1 dollar = 0.8169 euros)