DJ Commerzbank Aktiengesellschaft: Commerzbank 5.0: digital, personal, and responsible
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.
(MORE TO FOLLOW) Dow Jones Newswires
September 26, 2019 12:37 ET (16:37 GMT)
Acting responsibly also includes careful handling of customer data and high
data security.
However, the Bank intends to adopt an even more ambitious approach to
sustainability and environmental issues in future, and it will work even
more proactively to support the achievement of the Paris climate targets.
Commerzbank's operations are already climate-neutral. Also, it was recently
one of the world's first signatories to the UN Responsible Banking
Principles. This rigorous approach will also generate business
opportunities. In future, Commerzbank will also help its customers achieve
enhanced sustainability with a greener product offering. As of this week,
private customers are able to take out green mortgages. In the corporate
clients business, Commerzbank will gear its credit portfolio more towards
sustainability criteria.
*Release of equity through planned disposal of mBank; acquisition offer to
shareholders of comdirect bank*
On 20 September 2019, Commerzbank announced that the Bank was selling its
majority shareholding in mBank S.A. ('mBank') in Poland. This will allow the
Bank to generate the financial resources enabling a faster implementation of
its strategy and the associated investments. The sale will result in a
marked reduction in risk-weighted assets by around EUR17 billion and the
release of equity capital at Commerzbank. The transaction is subject to
regulatory approvals.
In conjunction with the integration of comdirect, Commerzbank also intends
to submit a voluntary public acquisition offer for all outstanding shares in
comdirect. The offer price is EUR11,44 per share in cash. This corresponds
to a premium of 25 per cent on the unaffected Xetra closing price of the
Comdirect share on 19 September 2019, the day before publication of the ad
hoc announcement on the Commerzbank draft strategy 5.0. Commerzbank already
holds a stake of 82 per cent in comdirect. Details of the planned
acquisition offer can be downloaded at www.commerzbank-offer.com [1].
*Adjusted outlook for 2019 - Additional growth in customers, assets, and
revenues over the medium term *
Over the course of 2019, the market environment has continued to deteriorate
further. This has been particularly evident in the corporate clients
business. The Bank is therefore no longer anticipating a rise in underlying
revenues for the year 2019.
The further development of the strategy is intended to allow the Bank to
achieve additional growth in customers and assets, and higher revenues by
2023, even in a market environment that is not expected to improve.
Commerzbank is aiming to reduce costs by around EUR600 million by 2023
compared to the current year. By investing in the progressive modernisation
of its Group-wide IT infrastructure, the Bank aims to reduce its IT costs to
EUR1billion. Costs are also to be cut further in the central divisions and
segments as well. This should result in a cost base of at most EUR5.5
billion in 2023 following the sale of mBank. As already announced, another
Group-wide headcount reduction of gross circa 4,300 and net circa 2,300
full-time positions is regrettable but inevitable. A significant proportion
of the circa 2,000 new positions will be created in strategically important
areas. The details will be worked out over the next months in consultation
with the employee representatives. The aim is to make the planned headcount
reduction as socially responsible as possible.
After the implementation phase of the strategy, the Bank intends to achieve
a return on equity of more than 4 per cent over the medium term. This
medium-term planning takes account of recent decisions by the European
Central Bank. The targeted capital ratio remains unchanged at between 12 and
13 per cent. This, in conjunction with the targeted return on equity, should
enable the Bank to pay regular dividends.
*****
*Press contact*
Margarita Thiel +49 69 136-46646
Nils Happich +49 69 136-80529
Maurice Farrouh +49 69 136-21947
Erik Nebel +49 69 136-44986
*****
About Commerzbank
Commerzbank is a leading international commercial bank with branches and
offices in almost 50 countries. In the two business segments Private and
Small Business Customers and Corporate Clients, the Bank offers a
comprehensive portfolio of financial services which is precisely aligned to
its clients' needs. Commerzbank finances approximately 30% of Germany's
foreign trade and is the leading finance provider for corporate clients in
Germany. Due to its in-depth sector know-how in the German economy, the Bank
is a leading provider of capital market products. Its subsidiaries Comdirect
in Germany and mBank in Poland are two of the world's most innovative online
banks. With approximately 1,000 branches, Commerzbank has one of the densest
branch networks among German private banks. In total, Commerzbank serves
more than 18 million private and small business customers, as well as more
than 70,000 corporate clients, multinationals, financial service providers,
and institutional clients worldwide. In 2018, it generated gross revenues of
EUR8.6 billion with approximately 49,000 employees.
*****
*Disclaimer*
This release contains forward-looking statements. Forward-looking statements
are statements that are not historical facts. In this release, these
statements concern inter alia the expected future business of Commerzbank,
efficiency gains and expected synergies, expected growth prospects and other
opportunities for an increase in value of Commerzbank as well as expected
future financial results, restructuring costs and other financial
developments and information. These forward-looking statements are based on
the management's current plans, expectations, estimates and projections.
They are subject to a number of assumptions and involve known and unknown
risks, uncertainties and other factors that may cause actual results and
developments to differ materially from any future results and developments
expressed or implied by such forward-looking statements. Such factors
include the conditions in the financial markets in Germany, in Europe, in
the USA and other regions from which Commerzbank derives a substantial
portion of its revenues and in which Commerzbank holds a substantial portion
of its assets, the development of asset prices and market volatility,
especially due to the ongoing European debt crisis, potential defaults of
borrowers or trading counterparties, the implementation of its strategic
initiatives to improve its business model, the reliability of its risk
management policies, procedures and methods, risks arising as a result of
regulatory change and other risks. Forward-looking statements therefore
speak only as of the date they are made. Commerzbank has no obligation to
update or release any revisions to the forward-looking statements contained
in this release to reflect events or circumstances after the date of this
release.
ISIN: DE000CBK1001
Category Code: MSCU
TIDM: CZB
LEI Code: 851WYGNLUQLFZBSYGB56
Sequence No.: 21505
EQS News ID: 881199
End of Announcement EQS News Service
1: https://link.cockpit.eqs.com/cgi-bin/fncls.ssp?fn=redirect&url=0097f309165f301e2a2ec1e10ebc32ec&application_id=881199&site_id=vwd&application_name=news
(END) Dow Jones Newswires
September 26, 2019 12:37 ET (16:37 GMT)
