Commerzbank took a larger hit from the collapse of Wirecard within the second quarter than from the financial fallout of the coronavirus pandemic, based on individuals accustomed to the matter.
Germany’s second-largest listed lender, which is embroiled in a management disaster after each its chairman and chief government introduced plans to resign final month, wrote off €175m of loans it made to the defunct funds supplier which filed for insolvency in June.
Mortgage-loss provisions regarding the pandemic stood at €131m, the lender mentioned when it reported outcomes on Wednesday.
Commerzbank’s working revenue collapsed 34 per cent to €205m within the three months to June in contrast with a 12 months earlier, whereas its web revenue fell by 21 per cent to €220m.
Each numbers had been higher than anticipated by analysts however the financial institution warned traders that it might swing to a web loss for the total 12 months as credit score losses and restructuring expenses had been more likely to rise.
Commerzbank didn’t identify Wirecard in its earnings launch however mentioned that it provisions contained a €175m cost “from a single case”. Folks accustomed to the small print informed the Monetary Instances that this was associated to Wirecard.
The lender was a part of a consortium of 15 banks which offered a €1.75bn revolving credit score facility to the collapsed fintech. On the time of the Wirecard’s collapse, 90 per cent of this had been drawn. Commerzbank, which was certainly one of 4 lead arrangers of the mortgage, offered €200m to the credit score facility.
The group’s widespread fairness tier one ratio — a core benchmark of its stability sheet energy — stood at 13.four per cent on the finish of the quarter, up from 12.9 per cent a 12 months in the past. Its return on fairness dropped by 1 / 4 to 2.9 per cent.
On Monday, the financial institution defied its second-largest shareholder, Cerberus, by electing Hans-Jörg Vetter, the previous chief government of state-owned German lender LBBW, as its subsequent chairman. Cerberus had beforehand raised “severe doubts” that Mr Vetter was “the best individual for this job or has the best expertise for it”. On Tuesday, the personal fairness group promised to work constructively with the brand new chairman regardless of its misgivings.