GERMANY - Commerzbank, Germany's third largest, is to hive off its Italian Asset Management unit by the end of June in a bid to streamline its troubled investment management business.
The news came at this week’s annual general meeting as Klaus-Peter Müller, chairman, pledged a turnaround in fortune for Commerzbank, prompted by a positive start to the year.
An undisclosed buyer for Commerzbank Asset Management Italia has been found. Commerzbank said that details will be released at the end of the month. Last year, Australian financial services group AMP came close to a deal which was then ejected by the Bank of Italy.
Müller restated Commerzbank’s asset management focus in core European markets including Germany, the UK through Jupiter Asset Management and through CCR Chevrillon Philippe in France, Commerzbank’s private clients unit. Towards the end of last year, the bank also expanded the operations of Jupiter by offering its funds throughout its distribution network, particularly in Germany.
But he also said that the bank is to press ahead with the shedding of 2,000 jobs in Germany and 1,100 - mostly in investment banking operations- in the US, Japan and the UK by the end of 2004.
“Commerzbank’s priority continues to be strict cost discipline. While the targets of the first cost-cutting offensive were easily exceeded, the second offensive is now being launched, which will mainly affect the bank’s head office in Frankfurt as well as its foreign outlets and subsidiaries,” said the firm.
“At the same time, new sources of revenues will be tapped and the bank’s business lines will adopt a new strategic orientation.”
Commerzbank found its self in the black in the black in first quarter, posting pre-tax profits of e38m, compared to a -e417m loss quarter on quarter. The bank also posted small net profit of e3m, compared with a loss of e243m in Q4 2002.
But asset management continued to slide, with pre-tax profits down e14m for Q1.
Despite the small profits, some financial analysts have expressed confidence in the recovery.
Dirk Bartsch, buy-side analyst, financials, for Allianz Dresdner Asset Management (Europe), said that many observers are overestimating Germany’s risk profile and underestimating domestic profitability. He added that prospects for Commerzbank are attractive. “We think that recovery is sustainable. The risk position in Germany is not as bad as some people think. If there are no big credit events - either from big corporates, international or nationals - then there will be declining risk provisions and they [Commerzbank] will continue on a high base.
“Their personnel and administration costs have come down but maybe they can do a little better here. They also have the possibility to increase lending in Germany, where the margins have substantially widened, which could be positive for net interest income for the next quarter and commission.”
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