* CEO waives 700,000 euro bonus, says 2013 dividend unlikely
* Hopes to conclude talks on job cuts by summer
* Variable pay down 17.2 pct across the bank
* Shares up 2.9 percent
By Arno Schuetze and Edward Taylor
FRANKFURT, Feb 15 Commerzbank's Chief
Executive announced that he is to waive his 700,000 euro bonus
for 2012 and warned investors not to expect a dividend from what
will be a difficult 2013.
Germany's second-biggest lender, which received an 18
billion-euro government bailout at the height of the financial
crisis, said that this year's earnings will take a hit from a
slowing economy and charges for cost cuts in its drive to make
the bank more resilient.
"The current year will not be an easy year," Chief Executive
Martin Blessing said on Friday, adding that a dividend payment
for 2013 was unlikely. "Strengthening our capital will continue
to be our priority."
Cut-throat competition and shrinking margins are forcing
lenders across Europe to review their business. While Swiss peer
UBS is firing 10,000 bankers, Barclays is
axing at least 3,700 jobs and German bellwether Deutsche Bank
is cutting 2,000 positions.
Commerzbank has warned that more charges are to come. It
will take a hit of about half a billion euros in the first
quarter of 2013 from a move to cut up to 6,000 jobs by 2016.
"2013 will be the year of change. And this change will cost
energy, money and time," Blessing said, adding that he hopes to
conclude negotiations with the works council on job cuts by the
The bank this month posted a slump in 2012 net profit to 6
million euros ($8 million) from 638 million a year earlier. Its
loan loss provisions rose to almost 1.7 billion euros from 1.4
Traders welcomed Commerzbank's pledge to continue to
increase its capital cushion to cover potential losses, which
helped the shares to gain 2.9 percent by 1240 GMT, outperforming
a 0.3 percent decline in the sector index.
The bank, whose core capital ratio stood at 7.6 percent at
the end of 2012, said it would take another two to three years
to reach bank regulators' target of 9 percent by 2019.
In general, however, investor confidence in Commerzbank
remains low. The bank's shares trade at 0.4 percent of its
expected book value for the next 12 months, against an average
of 0.7 percent among its European peers.
Commerzbank, which specialises in lending to small and
medium-sized companies, the backbone of Germany's economy, said
that it expects a revival of the German economy early this year
and a chance of strong growth in 2014.
Recent data showed that Germany's economy shrank in the
fourth quarter more than at any time since the height of the
2009 financial crisis and may have underperformed the wider euro
zone for the first time since then.
Commerzbank did not provide a detailed outlook for its 2013
earnings. In November it lowered its 2016 return on equity
target to about 8 percent at group level, setting a goal below
the industry's average cost of capital of 10-12 percent.
After announcing his own bonus sacrifice, CEO Blessing said
that 2012 variable remuneration across the bank had shrunk 17
percent, with investment bankers earning 20 percent less in
The investment banking unit slid to a fourth-quarter pretax
loss of 69 million euros from a profit of 27 million a year
By contrast, its Mittelstandsbank division, which finances
medium-sized German companies, posted a 30 percent rise year on
year with fourth-quarter pretax profit of 376 million euros.