Frankfurt Martin Blessing is one of the most eloquent German bank managers – and he is also willing to critically question his own actions. In retrospect, he made mistakes during his time as Commerzbank boss from 2008 to 2016, Blessing admitted on Monday evening at the International Club of Frankfurt Business Journalists (ICFW).
“Of course there are things that were wrongly decided,” said Blessing. The timing of the takeover of Dresdner Bank in 2008 shortly before the collapse of the US investment bank Lehman Brothers was miserable.
He also underestimated the risks posed by Greek government bonds in the Eurohypo subsidiary’s portfolio: “I didn’t see the financial market and real estate crisis turning into a real sovereign debt crisis in the euro area.”
When he took over the top job at Commerzbank in May 2008, the Greek bonds might still have been sold. At that time, however, he and his colleagues came to the conclusion that government bonds in their own currency should not be part of the core business in the long term, but “certainly not our biggest problem”. In the end, however, the billions in write-downs on Greek bonds became a big problem for the bank.
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Shortly after Blessing took office in 2008, Commerzbank found itself in trouble during the financial crisis and was saved from collapse by the state. The institute’s share price never recovered from this, which is why Blessing was regularly insulted by shareholders at the general meetings as a “capital destroyer”.
After Blessing and his successor Martin Zielke, Manfred Knof has been trying to stop the downward trend at Commerzbank since the beginning of 2021. By the end of 2024, he wants to cut 10,000 full-time positions and significantly thin out the branch network. At a strategy meeting of the board of directors and supervisory board next week, according to financial circles, there will be a discussion as to whether only 400 instead of the originally targeted 450 branches will remain in place.
“I didn’t see the financial market and real estate crisis turning into a real sovereign debt crisis in the euro area.” Martin Blessing on his time as CEO of Commerzbank
Blessing also closed branches during his time as CEO. He admits that he could have done it faster.
At the same time, the 59-year-old is asking for leniency. As a CEO, you can’t tackle 50 topics at the same time, you have to concentrate on the three to five most important ones. Other problems would then have to be addressed in the next round. “You’ll never get rid of it all at once.”
Blessing oversees investigation of money laundering scandal
Blessing saw how things are in the financial world at a young age. Grandfather Karl was president of the Bundesbank, father Werner sat on the board of Deutsche Bank. So it was only logical that young Martin began an apprenticeship at Dresdner Bank in 1983.
After an interlude at the consulting firm McKinsey, his path led him via Dresdner Bank to Commerzbank. There, the native of Bremen rose to the board in 2001, and seven years later he replaced the long-standing CEO Klaus-Peter Müller. In 2016, Blessing then surprisingly resigned and switched to the major Swiss bank UBS.
degradation
10,000
Place
the current Commerzbank CEO Manfred Knof wants to delete.
There he initially managed the Swiss private customer business, achieved record results and was even considered a possible successor to the then CEO Sergio Ermotti. However, as co-head of UBS’s most important division, wealth management, things did not go well afterwards: Business began to weaken and Blessing left UBS in 2019.
A year later he joined the board of directors of the major Danish bank Danske, where he has been chief controller since March 2022. One of his most important tasks is the investigation of a money laundering scandal that has shaken the entire financial sector. From 2007 to 2015, suspicious payments of around 200 billion euros were processed via the Estonian Danske branch.
The downsizing of the start-up sector has begun
Blessing continues to follow the development of the European banking sector closely. In the current year and possibly also in the first quarter of 2023, the figures from the financial institutions would be good because the higher interest rates would overcompensate for negative effects such as the decline in the markets, lower savings rates and lower consumer spending, he predicts.
Only in the course of the next year will it become clear how hard loan defaults hit individual institutions and whether the financial institutions kept their costs under control despite high inflation, says Blessing. “That will then distinguish the good banks from the worse ones.”
Blessing initially expects defaults, especially in consumer loans, for example for the purchase of a television, and in commercial real estate financing. “It will be a sector where it will be more difficult.”
In his view, the start-up sector, where Blessing is active as an investor, has begun to shrink. The manager emphasizes that there is less money for start-ups, and financing rounds are taking longer than they did a year ago.
For some companies, only the ratings have fallen, others no longer get any money at all. “Not everyone will get through that.”
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