building a client centric investment bank · building a client centric investment bank strong and...

Michael Reuther ‌ Member of the Board of Managing Directors ‌‌‌ Frankfurt/Main ‌ November 25th, 2009

Building a client centric Investment BankCorporates & Markets – Investors’ Day 2009

1Michael Reuther ‌ Member of the Board of Managing Directors ‌‌‌ Frankfurt/Main ‌ November 25th, 2009

“Others” currently not mapped to businesses

All business lines contributed to nine months performance

Strong revenue generator, supported by improved stock market

Strong revenue generation, esp. in H1, strong performance with German and EU client base

Excellent start for combined Corporate Finance

CPM part of FIC, CRM will be managed as a cost center

Repositioning on track, €2.5bn revenues before LLP (€250m) targeted for 2012

2009 affected by wind down of portfolios

Total revenues as stated (9M 2009)

Quarterly trend

0.3

0.6

0.8

0.5

Wind down -0.5

Revenues9M 2009 1.5

Total Revenues

w/o wind down

2.0

Others -0.1

CreditPortfolio

Management & CRM

CorporateFinance

FixedIncome &

Currencies

EquityMarkets &

Commodities

Revenues after LLP (9M 2009)(in € bn)

n/a

n/a

n/a


Wind down portfolios affected results

PRU is set up as a center of competence for winding down structured credit portfolios. For asset classes which are not structured credits, the wind down takes place outside PRU in defined C&M books

Asset Class Description 9M 2009 Outlook

Σ - €508m

Fixed Income & Currencies (FIC)

- €103m Vast majority will be completed in 2009Reduction of outright volatility positions and interest rate exposure

Exit of non-core products

Equity Markets & Commodities (EMC)

- €181m Wind down nearly finalized in 2009

Reduction of market risk esp. in dividend, implied volatility and correlation exposure

Harmonisation of valuation models

LBO/Infrastructure/HYDD

- €225mDue to maturity of the assets and the absence of liquid markets, wind down will last until 2012

Wind down of illiquid infrastructure and LBO assets

High Yield Distressed Debt


Stabilisation of revenues and exploitation of cost synergies are key

Focus on stability of revenue streams (customer driven revenues)

EMC leverages CB product platform with much bigger client base

FIC combines the traditional strength of both banks

In Corporate Finance we benefit from the stronger position of the bank in Germany, increased client base and a wider product range

Direct costs in front office were already significantly reduced in 2009, (almost) full run rate will be achieved in 2010

Synergies in indirect expenses will become effective in 2011/2012

2.61.7

2.5

-0.3

2012e9M 092008

0.650.76

1.0

2012e

1.45

0.8

9M 09

0.75

2008

2.3

1.3

1.5

Direct expensesIndirect expenses

* Wind down excl. LLP

Operating revenuesBefore LLP, in € bn

Operating expensesin € bn

*


Revenues €2.5bn

LLP €0.25bn

Cost €1.45bn

Op. profit €0.8bn

Capital employed €3.8bn

FTE ~1,650

Op. RoE ~20%

CIR ~60%

* CRM changed to cost center without separate P&L

Target 2012

COO and Research

Client Relationship Management (CRM)*

A provider of the full universe of banking services for the top 100 German Corporates and leading international Insurance companies

Equity Markets Commodities (EMC)

Fixed Income & Currencies (FIC)

Corporate Finance (CF)

Top 3 European Equity Derivatives provider/#1 German Equity house

Top counterparty for risk management solutions (IR/FX) –particularly in Corporate Germany

Top German Corporate Finance House

Corporates & Markets

C&M business model based on 3 core pillars


0

20

40

60

80

Dec 08 Mar 09 Jun 09 Sep 09 Target 2012

Market Risk RWA Credit Risk RWA Operational Risk RWA

Efficient management of resource is key to our new business approach

Balance sheet structure already significantly strengthened through reduction of non-core assets and stronger focus on German core client base

Total assets reduced by 15% (12/08 vs 09/09) – market values from derivatives positions highly dependent on interest rate environment

Balance sheet targets defined for sub-management level to ensure stringent monitoring of run-down portfolios

Management team strongly committed to wind down targets

Efficient capital management and reduction of non-core, capital intensive businesses, e.g. in the US and Western Europe

Expected impact of regulatory changes for market risk positions not significant due to conservative risk profile of C&M’s target model

Balance Sheet Management Capital Run-Down Management

Asset volume based on F/O balance sheet calculations, all figures excl. PRU ‌ All figures in € bn.

~50

-17%

-9%0

100

200

300

400

Dec 08 Mar 09 Jun 09 Sep 09 Target 2012

Securities/Loans Reverse Repos MtM Derivatives

-6%

-25%

-22%

-27%

~240

-11%-18%

~50


C&M will strive to be a strongly client-focused investment bank

EMC FIC Corporate Finance Size = Revenue Potential

Strong client-centric business model, sales credits 90% of revenues in EMC, >75% in FIC

Full alignment with Group priorities: highly focused on serving client-franchises of Commerzbank Group (“product and solution provider”)

Strong sales culture reflected in C&M setup: sales/trader ratio ~1,3:1 in target organization (compared to CB stand alone ~0,9:1)

Core characteristics of business model:

- stable revenue streams with limited trading volatility

- relatively low dependency on regulatory changes due to low risk profile

* EVF: Exotic and vanilla funds trading

medium

low

medium

Rates

Bond

EM & Credit

Sec. Fin.

Flow

Brokerage

Lev. Fin.

Struct. Fin.

M&A

EVF*

DCM Loans

ECM

DCM Bonds

Flow

IR Hybrids & Derivatives

Com-mo-dities

FX

Risk(Abs. VAR)

Franchise (Client share) high


Advisory, Execution and Distribution

Product Range: Syndicated Loans, Bonds, ECM, M&A

Advisory and Execution Service

Product Range: Syndicated Loans, Bonds, ECM, M&A

IPO – distribution channelCorporate Finance

Risk management (FX and Rates)

Distribution

Investment products

Risk management (FX and Rates)

Initiative launched to better channel fixed income and FX products via German retail network

FIC

Investment products (equity derivatives, commodities, cash equities)

Institutional

Risk management products for Corp. (equities/ commodities), to a lesser extent alsoinvestment products

Corporate

Investment product for retail franchise (equity and commodity derivatives)

EMC

Retail/Private

C&M is strongly connected to the bank’s clients

Connectivity very highConnectivity low


Levers

Successes

Stronger combined: Enhanced product expertise

Client ranked Commerzbank on a stand alone basis #9 and Dreba #4 in 2008 in the “Deutsche Risk Derivative” Poll. Combined we were ranked in the latest “Deutsche Risk Derivative” Poll:

#1 for risk management #1 for currencies#2 in total

Full service of Dresdner Branches with Flow products achieved

Top player in equity- and commodity-linked EMTNs

Derivatives Innovation Award 2009

Wider retail-franchise

Increased Institutional client base

Substantially increased our international distribution power for equity placements

Strong product knowledge of the joint EMC workforce

Expanded product offering

Wider client base originating from the combination of Dresdner’s Institutionals and Commerzbank’s Corporates

Better channel fixed income and FX products via retail network

Specialist knowledge in risk management and currencies

Operate an international footprint in FX where 24–7 service is provided

FIC EMC


Levers

Successes

Stronger combined: Wider client portfolio

#1 Bookrunner and #1 mandated lead arranger German DCM loans

# 1 Bookrunner German Covered Bonds and top 3 German Corporate Bonds

Most active bank in German equity capital markets in 2008 and 2009 with an outstanding track record in equity and equity-linked transactions

Partner of choice for important debt and equity capital market mandates

Substantial increase of IB gross revenues against lower risk capital levels for our clients

Recognition as strong IB partner significantly increased among clients and competitors

Servicing approx. 100 MNC and int. insurance companies

New sector driven CRM approach to better suit needs of capital markets driven clients

Much broader investment banking expertise of new CRM

Combining long standing bilateral relationships

Increased deal share in the German Market achieved through combined forces

Strong corporate and institutional customer franchise

Increased client groups and wider product range (hybrids cap.)

Corporate Finance advisory and execution for MSB

CF CRM


Stronger thanks to our integration: one brand – new possibilities

Building a client centric Investment Bank

Combined we can bank on a wider client portfolio and enhanced product expertise

Partner of choice when it comes to the developmentand execution of smart solutions

Diverse and creative teams servicing our clients

Entrepreneurial approach, agility and risk awareness


Relocation ongoing, timeline differs by location: London, NY and Asia almost finalized, Frankfurt ongoing Relocation

Position migration

Target org-structure in place and running

Appointment up to the 4th management level

90% of global restructuring achieved

Restructuring / HR Implementation

All 40,000 DKIB clients allocated to MSB, ZFI and C&M; New client responsibilities defined and relationship transfer ongoing

Brand migration on September 1st successfulClients

70% of the overall positions will be migrated by the end of 2009, the remaining 30% will be migrated beforeQ3 2010

Comment

IT-Integration

Degree of completion

Dresdner Bank integration: Great progress made in C&MTopic view


Selection, HR- restructuring and relocation in the region “nearly” finalisedAsia

Works council negotiations concluded for most of EuropeOther

Branch migration on track for completion by November 30th

Move to WFC2 will be completed by year-endNew York

Selection process for 4th management level communicated

Interim reallocation ongoing (end of Nov 09), final moves into target location H1 2010

Frankfurt

Restructuring almost accomplished

Relocation from four locations into one, single trading floor establishedLondon

CommentDegree of completion

Dresdner Bank integration: Great progress made in C&MLocation view


Building a client centric investment bank

Strong and client centric business model

Highly focused on servicing enlarged client base of Commerzbank

Benefitting from market consolidation

Increased deal share achieved through combined forces

80% of integration plan achieved

FTE reduction by now ~ 1.200


Measures

Revenues

Operating expenses

LLP

Capital employed

RoE*

2010 2012

Operatingprofit

€0.8bn

CIR~60%

RoE*~20%

Stabilisation of revenues

Exploitation of costsynergies

Sustainability of results

Release of balance sheetusage and equity tied up

I

II

III

IV

Roadmap 2012: Our target

Main P&L items Target 2012

vs. 2009 vs. 2010

* Operating RoE


Appendix: Segmental reporting


League Tables Syndicated Loan Market in Germany: Q1–Q3 2009

3.542,327Barclays Capital10

3.742,484Credit Suisse9

3.862,558Calyon8

4.352,873Citi7

4.382,916WestLB6

4.793,144BNP Paribas5

Germany MLA Rankings Q1–Q3 2009

5.3183,578Deutsche Bank4

11.8307,934Commerzbank Group1

6.4144,316LBBW2

18

No.

4,221

Amount(in $ m.)

6.3UniCreditGroup3

Share(in %)Mandated Lead ArrangerPos.

2.931,955UniCredit Group7

2.731,832BNP Paribas8

1.811,221UBS, Mitsubishi UFJ Fin., Credit Suisse, Calyon, BayLaBa, Barclays Capital, Banco Santander

9

3.052,025LBBW6

3.412,250Citi5

Germany Bookrunner Rankings Q1–Q3 2009

4.513,033Nordea Bank AB4

13.3188,964Commerzbank Group1

10.4117,004Deutsche Bank2

3

No.

4,017

Amount(in $ m)

6.0RBS3

Share(in %)BookrunnerPos.

€ 9,000 m

Term LoanFacility

MLAFacility Agent

January 2009

€ 1,550 m

Term Loan &Rev. Credit Facility

MLABookrunner

May 2009

€ 8,744.56 m

Term LoanFacility

MLABookrunner

June 2009

€ 550 m

Forward StartFacility

MLA, BookrunnerFacility Agent

June 2009

€ 178 m

Syndicated CreditFacility

MLABookrunner

August 2009

€ 340 m

Snydicated CreditFacility

MLA, BookrunnerFacility Agent

July 2009

USD 4,500 m

Letter of Credit Facility

MLABookrunner

February 2009


League Tables Syndicated Loan Market in Germany: 2006 - 2008

Source: Dealogic Loanware, according to their ranking criteria 09/01/2009 Note: Eurohypo’s transactions included in Commerzbank Group statistics

2.7561,899.21BNP Paribas111185.9274,088.16RBS667

1.6241,115.32DZ Bank161893.7342,576.40JPMorgan579

2.9582,036.47WestLB8563.6692,527.02HSH Nordbank0155

1.7241,190.57LBBW16259

11151516

Iss.

4,907.283,611.939,125.094,491.40

Amount $ (m)Germany: Bookrunners according to number of deals

7.11UniCredit Group444

6.50Commerzbank Group33113.22Deutsche Bank222

Dresdner Kleinwort

Bank Name

1

2006

5.2312

%share20072008

2.9582,036.47WestLB141583.6692,527.02HSH Nordbankn/a367

2.7561,899.21BNP Paribas61892.2821,573.95Barclays Capital7210

3.7342,576.40JPMorgan4565.23153,611.93Dresdner Kleinwort2115

7161115

Iss.

4,088.164,491.404,907.289,125.09

Amount $ (m)Germany: Bookrunners according to volume

5.92RBS544

13.22Deutsche Bank1117.11UniCredit Group12122

Commerzbank Group

Bank Name

9

2006

6.5063

%share20072008

5.44113,758.78BNP Paribas13883.68152,542.12WestLB556

3.30112,280.50LBBW81882.28101,575.75DZ Bank161410

8.14155,623.54RBS7664.51233,115.85HSH Nordbank22215

24263030

Iss.

7,730.726,334.165,110.885,497.98

Amount $ (m)Germany: MLA according to number of deals

11.20Deutsche Bank234

7.96Commerzbank Group3217.40Dresdner Kleinwort111

UniCredit Group

Bank Name

4

2006

9.1743

%share20072008

3.9682,735.20Calyon181284.51233,115.85HSH Nordbank25427

3.68152,542.12WestLB151793.6372,508.01JPMorgan21110

5.44113,758.78BNP Paribas71367.40305,110.88Dresdner Kleinwort355

30152624

Iss.

5,497.985,623.546,334.167,730.72

Amount $ (m)Germany: MLA according to volume

7.96Commerzbank Group814

11.20Deutsche Bank1319.17UniCredit Group1462

RBS

Bank Name

5

2006

8.1493

%share20072008


Corporate Bond League Tables 2009

Source: Dealogic DCM Analytics (as of October 13, 2009)

…

1.324900.00Barclays Capital191.453990.00ING181.6561,129.17Intesa Sanpaolo17

1.265862.50UBS20

1.6751,137.50WestLB16

100.0011768,313.25Total

3.4392,346.50LBBW123.41122,326.67Bayerische Landesbank132.3361,591.67BoA Merrill Lynch14

5.12143,500.00Calyon84.28142,925.00DZ Bank9

5.29183,613.33UniCredit Group7

3.4892,375.00HSBC11

6.78144,631.25JPMorgan6

4.21102,875.00Citi10

7.09174,842.08BNP Paribas5

1.7261,175.00Morgan Stanley15

German € Corporate Bonds

8.04225,490.83SG CIB4

16.424311,216.33Deutsche Bank18.91186,083.33RBS2

27

Iss.

5,770.83

Amt. € m

8.45Commerzbank Group3

%shareBookrunnerPos.

…

1.23183,343.52Goldman Sachs191.66244,504.92BBVA181.82254,927.73UBS17

1.20173,249.75Intesa Sanpaolo20

2.03315,508.15Natixis16

100.00403271,323.97Total

2.91417,882.93Banco Santander SA122.35306,375.00Commerzbank Group132.17305,882.86ING14

5.585815,140.44HSBC83.965410,755.45Citi9

5.597715,174.29Barclays Capital7

2.94347,970.15BoA Merrill Lynch11

5.747215,581.69JPMorgan6

3.08398,349.70UniCredit Group10

6.988018,936.54Calyon5

2.15295,825.68Credit Suisse15

All € Corporate Bonds

8.4810323,007.30RBS4

10.6013128,772.81BNP Paribas110.5312728,572.94Deutsche Bank2

121

Iss.

26,484.61

Amt. € m

9.76SG Corporate & 3



Corporate Bond League Tables 2008 – Commerzbank and Dresdner Kleinwort separated

Source: Dealogic DCM Analytics

…

1.183426.67BBVA191.382500.00Bayerische Landesbank181.562562.50Citi17

0.901325.00BoA Merrill Lynch20

1.713616.67WestLB16

100.006736,130.58Total

3.4281,235.00LBBW122.423875.00Morgan Stanley132.354850.00ING14

5.3291,920.83Commerzbank85.3081,914.17Barclays Capital9

5.6272,029.17Calyon7

3.8371,383.33DZ Bank11

5.7372,070.83BNP Paribas6

5.1571,859.00HSBC10

6.0262,175.00Goldman Sachs5

1.903687.50UBS15

German € Corporate Bonds

6,6282,391.67RBS4

19.64257,094.41Deutsche Bank110.39153,754.17UniCredit Group2

11

Iss.

2,654.17

Amt. € m

7.35SG CIB3


0.9371,383.33DZ Bank210.91101,362.30LBBW220.7661,132.19Dresdner Kleinwort23

…

1.11191,654.63BBVA191.2991,920.84Commerzbank181.62112,417.83Morgan Stanley17

1.0871,617.50Banco Santander SA20

1.81142,695.00Citi16

100.00288149,301.57Total

2.91224,349.17UniCredit Group122.87164,288.83Credit Suisse132.06143,079.17ING14

4.00265,966.67UBS83.86235,763.33Calyon9

6.924810,330.87HSBC7

3.42255,110.00Natixis11

7.544611,250.00JPMorgan6

3.61275,386.53BoA Merrill Lynch10

7.815511,664.37SG CIB5

2.04103,047.00Goldman Sachs15

All € Corporate Bonds

8.135212,140.00Barclays Capital4

11.675717,420.99Deutsche Bank110.096415,064.17RBS2

71

Iss.

14,599.68

Amt. € m

9.78BNP Paribas3



Commerzbank was named “Best Bank in Germany” for the second time by the specialist magazine “Euromoney”. The “Award for Excellence” was made in particular recognition of the development of the SME Bank segment. Commerzbank previously won the award in 2006.

Ranked #1 by Euromoney in 2008

The integration of the businesses formerly known as Dresdner Kleinwort is expected to be completed by the end of 2009.

“By taking the best of both houses we are creating an investment banking platform that is stronger in competence and more excellent in our chosen areas than before.”

Michael Reuther, Board MemberCorporates & Markets, 2009

Awards 2009 (selection)


DCM Loans Transactions Highlights 2009


Source: Dealogic; by number of transactions; full apportionment; only bookrunner positions

2165RBS5

Equity transactions

2268Credit Suisse4

5439Commerzbank13191UniCredit Group23

#

90

Volume (€m)

Goldman Sachs3

Bookrunner 2009 (9-mth)

3195DZ Bank53484Morgan Stanley4

8835Commerzbank15788Credit Suisse24

#

3,798

Volume (€m)

Deutsche Bank3

Bookrunner 2008

3326JPMorgan5

Equity-linked transactions

4414Credit Suisse4

52,263Morgan Stanley15491Deutsche Bank24

#

426

Volume (€m)

Commerzbank3

Bookrunner 2009 (9-mth)

League tables Germany

The leading ECM franchise for equity and equity-linked transactions


Zertifikate Award 2009

For the third consecutive year, the jury electedCommerzbank to the best German best German certificatecertificate issuerissuerin 2009!

Commerzbank won 1st prizes in 4 of 10 main-categories:

1. Best 1. Best issuerissuer 20092009

1. Discount Certificates1. Discount Certificates

1. Bonus Certificates1. Bonus Certificates

1. 1. LeveragedLeveraged ProductsProducts

and also 2nd prize for:

2. Service quality

and 3rd prizes for:

3. Express Certificates

3. Innovation of the year


Corporate Finance(CF)

Issuing bonds in DCMLoan origination and underwriting in DCM loansArranging, Underwriting and debt managementM&A advisory

Credit Portfolio Management (CPM)

Fixed Income & Currencies(FIC)

Equity Markets Commodities(EMC)

Glossary

Cash Equity trading and salesCommodities Sales and TradingBroad Equity Derivatives Sales, Trading and Structuring activities (Vanilla & Exotics)Stock borrowing and lending services

Focused on client driven trading activities in:- various bond products- interest rates swaps and derivatives - FX spot and derivatives

Central management of loan assets

For more information, please contact Commerzbank´s IR team:

[email protected]

Jürgen Ackermann (Head of Investor Relations)P: +49 69 136 22338M: [email protected]

Christina Perić (Assistant)P: +49 69 136 22255 M: [email protected]

Michael H. Klein (Head of Equity IR)P: +49 69 136 24522M: [email protected]

Sandra BüschkenP: +49 69 136 23617M: [email protected]

Dr. Frank GrobeP: +49 69 263 50780M: [email protected]

Ute Heiserer-JäckelP: +49 69 136 41874M: [email protected]

Simone NuxollP: +49 69 136 45660M: [email protected]

Stefan PhilippiP: +49 69 136 45231M: [email protected]

Klaus-Dieter Schallmayer (Head of FR/FI)P: +49-69 263 57628M: [email protected]

Wennemar von BodelschwinghP: +49 69 136 43611M: [email protected]

Michael DesprezP: +49 69 263 54357M: [email protected]

Karsten SwobodaP: +49 69 136 22339M: [email protected]

Dirk Bartsch (Head of Strategic Research)P: +49 69 136 2 2799 M: [email protected]

Markus BärP: +49 69 136 43886 M: [email protected]

Ulf PlesmannP: +49 69 136 43888 M: [email protected]

Financial Reporting / Fixed IncomeEquity IR Strategic Research


Disclaimerinvestor relations

This presentation has been prepared and issued by Commerzbank AG. This publication is intended for professional and institutional customers.Any information in this presentation is based on data obtained from sources considered to be reliable, but no representations or guarantees are made by Commerzbank Group with regard to the accuracy of the data. The opinions and estimates contained herein constitute our best judgement at this date and time, and are subject to change without notice. This presentation is for information purposes, it is not intended to be and should not be construed as an offer or solicitation to acquire, or dispose of any of the securities or issues mentioned in this presentation.Commerzbank AG and/or its subsidiaries and/or affiliates (herein described as Commerzbank Group) may use the information in this presentation prior to its publication to its customers. Commerzbank Group or its employees may also own or build positions or trade in any such securities, issues, and derivatives thereon and may also sell them whenever considered appropriate. Commerzbank Group may also provide banking or other advisory services to interested parties.Commerzbank Group accepts no responsibility or liability whatsoever for any expense, loss or damages arising out of, or in any way connected with, the use of all or any part of this presentation.

This publication contains forward-looking statements on Commerzbank’s business and earnings performance, which are based upon our current plans, estimates, forecasts and expectations. The statements entail risks and uncertainties, as there are a variety of factors which influence our business and to a great extent lie beyond our sphere of influence. Above all, these include the economic situation, the state of the financial markets worldwide and possible loan losses. Actual results and developments may, therefore, diverge considerably from our current assumptions, which, for this reason, are valid only at the time of publication. We undertake no obligation to revise our forward-looking statements in the light of either new information or unexpected events. Copies of this document are available upon request or can be downloaded from www.commerzbank.com/aktionaere/index.htm

Germany: Commerzbank AG is registered in the Commercial Register at the Amtsgericht Frankfurt (local court) under the number HRB 32000 and is subject to supervision by the Bundesanstalt für Finanzdienstleistungen (BaFin), Lurgiallee 12, 60439 Frankfurt© Commerzbank 2009. All rights reserved.

Commerzbank AG GM-CKaiserplatz60261 FrankfurtTel.: + 49 69 136 222 55

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