Commerzbank’s ratings reflect the management’s ability to materially de-risk the bank, following its merger with Dresdner Bank and the aftermaths of the financial crisis. Furthermore, the ratings consider the bank’s transformation (albeit not yet complete) and re-establishment of a more dynamic business structure, with promising potential for improving profitability.

The bank appears to be making good progress with the implementation of its new structuring plan, albeit during the implementation of the new restructuring plan, Commerzbank’s outlook on profitability will remain rather subdued.

One of the key focuses of Commerzbank is its ‘Mittelstand business’ (medium-size corporate business) in Germany. Although the bank has rebuilt a good reputation and track record in this segment, it nevertheless faces formidable challenges and stiff competition. In this respect Scope sees one particular advantage that Commerzbank has kept its branch network relatively strong. Scope believes that a larger branch network, while costly, may provide some strategic advantages in Germany’s fiercely competitive banking market.

This publication does not constitute a credit rating action. For the official credit rating action release click here.

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