Commerzbank Aktiengesellschaft (CZB)
Commerzbank Aktiengesellschaft: Commerzbank 5.0: digital, personal, and
responsible
26-Sep-2019 / 18:37 CET/CEST
Dissemination of a Regulatory Announcement, transmitted by EQS Group.
The issuer is solely responsible for the content of this announcement.
*- Expansion of mobile banking while maintaining a strong branch presence*
*- Bundling of digital expertise through planned integration of comdirect*
*- Strengthening of distribution capability and increased efficiency in
Corporate Clients*
*- EUR750 million for investments in digitalisation, IT infrastructure and
growth*
*- Investment capacity to be strengthened by planned disposal of mBank *
*- Group cost base to come down by EUR600 million by 2023*
*- Social responsibility even more firmly embedded in the business model in
future*
Following the ad-hoc release of the cornerstones of the new strategic
programme 'Commerzbank 5.0' on 20 September 2019, the Board of Managing
Directors and the Supervisory Board have discussed and approved the new
programme. With its new strategy, the Bank is investing in technological
innovation and into its core business. This will enable the Bank to
accelerate its digitalisation, generate growth and increase efficiency.
In the Private and Small Business Customers segment, Commerzbank is
investing strongly into its mobile banking franchise, keeping the branch
network as a core pillar of its offering. With around 800 branches,
Commerzbank will continue to have a strong nationwide presence. The Bank
sees revenue potential through the enhanced use of data, which will enable
the provision of individually tailored products to clients. Commerzbank is
also planning to introduce a new pricing strategy. Through the planned
integration of comdirect the Bank will bundle its digital expertise.
In the Corporate Clients segment, the Bank will further strengthen its
market presence with Mittelstand-clients, or SMEs. The further
digitalisation and increased platform efficiency is expected to create
greater scope for sales and advisory. In Germany alone, the Bank intends to
increase its distribution capability by adding more than 150 new staff. The
focus will lie on leveraging further business opportunities with existing
clients and on increasing capital efficiency.
The Bank's strategic programme foresees total investments of around EUR1.6
billion in digitalisation and further cost reductions. This will include
additional investments of EUR750 million in digitalisation, IT
infrastructure, and growth. The remaining EUR850 million will consist of
restructuring costs for the planned headcount reduction of a gross 4,300 and
net 2,300 full-time positions, and for the announced changes to the branch
network. The planned divestment of the majority shareholding in mBank S.A.
('mBank') in Poland is expected to generate the financial resources enabling
a faster implementation of the strategy.
'Commerzbank 5.0 will put the Bank on a sustainable footing. We want it to
continue to be successful with clients even in a deteriorating market
environment. This means we are significantly reducing our cost base whilst
making major investments in our distribution capability as well as the
faster digitalisation of the Bank. We want to convince customers with a
superior product and service offering and be their first choice', commented
Martin Zielke, Chairman of the Board of Managing Directors of Commerzbank
AG.
'As part of Commerzbank 5.0, we are planning to invest around EUR1.6 billion
in digitalisation and in further improving our cost efficiency. The planned
sale of mBank will result in a significant reduction of risk-weighted assets
and release capital to enable us to implement our strategy faster. In a
market environment that looks set to deteriorate further, we have set
ourselves realistic return targets,' commented Chief Financial Officer
Stephan Engels.
*Private and Small-Business Customers: Expansion of mobile banking while
maintaining a strong branch presence *
In the Private and Small Business Customers segment, Commerzbank is
investing strongly into its mobile banking franchise under its mobile first
strategy. Today, 1.2 million out of a total of 1.7 million daily customer
contacts already take place through the mobile and online channels. As a
result of the expected increase in mobile usage, Commerzbank wants to gain
significantly more data points and use them to tap additional business
potential. The use of algorithms will help the Bank to design products and
services that are more precisely tailored to the individual needs of
customers. At the same time, the enhanced use of algorithms and data should
increase the efficiency of new customer acquisition.
After growing strongly over recent years and increasing its active customer
base by a net 1.3 million customers, Commerzbank sees measured growth in the
Private and Small-Business Customers segment. By the end of 2023, the Bank
wants to win more than 1 million new customers in Germany. Following the
sale of ebase with 1 million customers and the pending closure of largely
inactive customer accounts amounting to a further 1 million, the Bank will
continue its growth on an active customer base of 11.1 million.
Furthermore, Commerzbank is aiming to systematically tap additional revenue
potential with existing customers. The Bank is introducing a new pricing
strategy, thereby giving customers more choice of service and price options.
In concrete terms, the basic offering will be complemented by a modular
offering. In future, under a fair use policy, inactivity will also be
considered in the pricing models for otherwise free basic products.
Commerzbank will retain a nationwide presence in Germany with around 800
branches. It plans to incrementally close around 200 branches and move to a
mix of branch formats that is in line with changing customer requirements.
The Bank will thereby adapt its branch network to the expected changes in
branch utilisation in Germany due to the greater use of digital channels.
The Bank's real estate expertise will be bundled in 50 new, regional real
estate centres.
*Bundling of digital expertise through planned integration of comdirect *
Business with private and small-business customers will also be strengthened
by the planned integration of comdirect into Commerzbank. Commerzbank
intends to leverage the high level of digital expertise of comdirect for the
entire Group. Comdirect will become part of a strong, innovative
multichannel bank and will benefit from economies of scale and opportunities
for growth within the Group.
Since its foundation in 1994, comdirect has set benchmarks in online banking
with innovative products, services, and advisory. In future, Commerzbank
intends to make this acknowledged expertise available to all its customers.
Customers of comdirect will keep the service offerings they are used to,
while also benefitting from Commerzbank's branch presence. In return,
Commerzbank would be able to provide its customers with access to the
outstanding brokerage offering of comdirect, which will be continued under
the same product brand.
*Corporate Clients: Strengthening of distribution and increased efficiency *
In the Corporate Clients segment, Commerzbank is consistently expanding its
position as the leading German bank for SMEs ('Mittelstand'). The emphasis
is clearly on striking a balance between additional business, risk appetite,
and capital efficiency. Furthermore, the Bank is focussing on enhancing its
distribution and platform efficiency.
While continuing to grow in customer numbers, Commerzbank intends to make
better use of the potential offered by existing customer relationships. It
is therefore strengthening its distribution capabilities with more than 150
new front office staff in Germany alone. Distribution and advisory in
selected European markets will also be increased. Furthermore, additional
digitalisation and the targeted improvement in platform efficiency will open
up further scope for sales. This, in conjunction with the increase in
personnel, will enable an even higher intensity of client coverage and
advice.
Commerzbank is also expanding its proven sector approach. In future, more
than 500 corporate clients will be covered this way in Germany and in
selected Eurozone countries, compared to around 100 currently. Experience
since the launch of this approach in 2016 shows that supporting clients with
comprehensive sector expertise also contributes to making existing customer
relationships more profitable.
The efficiency of the corporate banking platform is also being enhanced. The
Bank is aiming to consolidate its platforms. In future, as many
international transactions as possible are to be processed on the German IT
platform. In addition, greater platform utilisation is anticipated as a
result of new business. Capital efficiency and cost discipline will be
relevant for any additional growth to ensure an appropriate return on
capital. In addition, the Bank is planning to support its growth trajectory
by further strengthening its credit risk expertise.
In recent years, the incumbent Board Member responsible for the segment,
Michael Reuther, has repositioned the Corporate Client segment in a
challenging environment and successfully advanced the integration of
corporate banking and the capital markets business. The designated Board
Member for Corporate Clients, Roland Boekhout, has a long track record in
Germany and in European markets that will enable him to continue to develop
this strong agenda.
*Social responsibility even more firmly embedded in the business model in
future*
The foundation for the economic success of Commerzbank is and always will be
the social acceptance of its approach to business. As a responsible bank,
Commerzbank has a longstanding position on controversial topics such as
weapons, environmentally damaging energy sources and basic food speculation.
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