Salem Radio Network News Monday, September 20, 2021

Business

Commerzbank swings to Q2 loss on restructuring costs, write-off

FRANKFURT (Reuters) -Germany’s Commerzbank on Wednesday said that it swung to a second-quarter loss as the lender undergoes a major restructuring and after a write-off to end an outsourcing project, pushing its shares to their lowest in three months.

Germany’s No. 2 lender is trying to turn over a new leaf under new Chief Executive Manfred Knof. It is carrying out a 2 billion euro ($2.4 billion) restructuring involving hundreds of branch closures and 10,000 job cuts to get back on a path to profit.

The net loss of 527 million euros ($625.50 million) in the second quarter compares with a profit of 183 million euros a year earlier.

Analysts had expected a net loss of 504 million euros, and shares traded down as much as 5.4% in Frankfurt.

“Let me be crisp and clear: the execution of our strategy is on track, and I make sure that any road blocks are removed ASAP,” Knof told analysts.

Commerzbank, which is still partially owned by the state after a bailout during the financial crisis more than a decade ago, is expected to post a loss for the full year as well, according to analysts.

Last month, Commerzbank said it would abandon a project to outsource securities settlement to HSBC and as a result would write off 200 million euros in the quarter. The bank said it was halting the outsourcing plan after identifying risks to its technical implementation.

The bank also announced that it was setting aside 66 million euros to deal with the possibility that customers will try to claw back past price increases after a German court ruling that favours consumers over banking fees.

($1 = 0.8425 euros)

(Reporting by Tom Sims and Matthias Inverardi, editing by Kirsti Knolle and Emelia Sithole-Matarise)

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