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WORLD / Bank Writedown |
Subprime may take toll on Commerzbank(China Daily)
Updated: 2007-09-21 07:01 Commerzbank may face a higher-than-expected loss from the US subprime crisis it said yesterday, a day after rival Deutsche Bank warned the global credit crunch was hitting its profits. Commerzbank had previously told investors it would put aside roughly 80 million euros to cover losses from about 1.2 billion euros of debt products it bought that included subprime mortgages. But yesterday it shied away from reiterating that estimate, instead flagging a potentially bigger fallout. "Possible additional losses resulting from the subprime crisis will not have a significant impact on our dynamic development from today's point of view," Commerzbank Chief Executive Klaus-Peter Mueller said ahead of an event in Frankfurt for its investors. Banks worldwide have been struggling to pin down their real losses on loans and securities in credit markets where trading has dried up and prices are often only notional. Germany had been hit hardest in Europe by the storm that defaults on U.S. subprime mortgages have caused in global credit markets. Although attention has moved to the United Kingdom, where the government has guaranteed deposits at troubled mortgage lender Northern Rock, investors remain nervous that there could be worse to come in Europe's biggest economy. A bigger subprime bill could threaten Commerzbank's pledge to significantly beat its profit target for the year and put a fly in the ointment for what sources have said will be Mueller's last year as chief executive. Mueller told investors that Germany's second-biggest listed lender would be able to make its profitability goal of a net return on equity of 12 percent. Agencies (China Daily 09/21/2007 page16) |
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