FRANKFURT (Reuters) - Supervisors at the European Central Bank have long been concerned about Commerzbank’s (CBKG.DE) strategy, but a planned on-site inspection of the bank has not uncovered any surprises, a supervisory source said on Friday.
“There are concerns and open questions,” said the source, who spoke on condition of anonymity.
The Sueddeutsche Zeitung newspaper had reported that the ECB had conducted a special audit of Commerzbank’s business plans until 2021 and discovered major weaknesses.
Citing unnamed supervisory sources, it said the ECB was particularly concerned about the German lender’s business for corporate clients, an important profit driver.
A spokesman for Commerzbank declined to comment on the supervisory source’s comments and the newspaper report. The ECB also declined to comment.
The ECB conducts on-site inspections of the banks it oversees to determine various risks, including their business models and profitability.
Sueddeutsche said it had been told there were risks to Commerzbank’s long-term profitability, and that it would have to tackle the problem. The newspaper gave no further detail.
In its third-quarter earnings statement on Thursday, Commerzbank said it had reduced risk and improved the quality of its balance sheet, contributing to a “significantly improved result” in this year’s European Banking Authority stress test.
Also on Thursday, Chief Financial Officer Stephan Engels said the bank was slightly revising down its 2020 revenue target of 9.8 billion euros due to macroeconomic factors such as Brexit and ongoing trade tensions.
He said the bank would give a further update on profit targets at its full-year news conference in early 2019.
Reporting by Hans Seidenstuecker, Andreas Framke, Francesco Canepa and Tom Sims; Editing by Kevin Liffey