Shares in the bank fell significantly in after-hours trading.
(Photo: dpa)
Frankfurt The new year begins with bad news for Commerzbank. The institute announced on Friday evening that its Polish subsidiary mBank had to set aside a further 436 million euros because of the dispute over how to handle Swiss franc loans. The result of Germany’s second largest private bank will be burdened in the corresponding amount.
“Nevertheless, Commerzbank expects a positive consolidated result for the 2021 financial year,” the Frankfurt financial institution continued. Commerzbank had recently emphasized several times that it would be back in the black in 2021 – after a loss of 2.9 billion euros the year before last. However, this forecast was subject to the proviso “that there will be no substantial change in relation to mBank’s loan portfolio in Swiss francs”.
However, that is exactly what has happened. The fact that Commerzbank will still be in the black indicates that business in the rest of the institute has gone better than analysts had expected. Before the announcement on Friday evening, they had expected Commerzbank to make an average profit of 122 million euros last year.
Investors reacted disappointed to the bad news from Poland. Commerzbank shares fell more than 3 percent in after-hours trading on Friday after ending trading 1.8 percent down.
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mBank creates the conditions for comparisons
Due to low interest rates in Switzerland, many Poles took out loans in Swiss francs to finance their homes. However, the national currency, the zloty, then lost a lot of value against the Swiss franc, which increased the burden on home builders.
Many borrowers then took action against Polish financial institutions because of possibly unlawful clauses. There are more than 10,000 lawsuits against mBank alone. The bank had therefore already increased its risk provision several times. With the provisions that have now been made, the provisions for the Swiss franc loan portfolio, which last amounted to EUR 2.4 billion, should roughly double to around EUR 900 million.
After a decision by the Polish Supreme Court on the subject had been postponed several times, the Polish financial regulator KNF advised financial institutions in autumn 2021 to seek out-of-court settlements with their customers.
mBank then started a pilot project in which they offered comparisons to some customers. With the additional provisions, mBank could now possibly expand the offer to all customers. On the other hand, if it didn’t come to that, she would be better prepared for the threat of defeat in court.
Commerzbank wants to stick with mBank for the time being
Commerzbank CFO Bettina Orlopp said in November that mBank was open to all solutions. “We want to end this saga, but it has to be a reasonable ending.” Binding settlements would have to be found that all customers could accept and that would end the legal proceedings.
Commerzbank holds 69.3 percent of mBank. Former CEO Martin Zielke announced a sale of the mBank stake in 2019, but then called off the sale in May 2020. One reason was that mBank’s share price had fallen so much due to the dispute over franc loans and the outbreak of Corona that Commerzbank was unable to achieve an attractive price.
Since May 2020, however, the mBank price has risen sharply – mainly due to the rise in key interest rates in Poland. However, the Frankfurt money house is not planning a new start of sales, as the current CEO Manfred Knof made clear in an interview with the Handelsblatt at the end of December. “mBank is an integral part of the Commerzbank Group and its income and costs are fully taken into account in the planning for the next few years,” said Knof. “It has an excellent business model, makes a positive contribution to the income statement and is a role model for the entire group when it comes to digitization.”
More: Commerzbank boss warns of growing risk of inflation – 2022 “challenging year” for his institute.