Commerzbank, the biggest loser on Germany’s benchmark DAX Index this year, has recently steepened its decline because of unfounded speculation about risks in its shipping portfolio, said Chief Financial Officer Stephan Engels.
'The stock retreat isn’t at all fundamentally justified', Engels, 51, said Thursday in an internal memo to staff obtained by Bloomberg News.
'There’s renewed speculation about risks in our shipping portfolio. We on the management board find that incomprehensible'.
Commerzbank is selling assets and allowing loans to expire to comply with European Union requirements $24bn in state aid the Frankfurt-based firm received in 2009. That portfolio, comprised of credit to shipping companies hit by oversupply in the freight industry as well as commercial real-estate loans and sovereign debt, is loss-making.
'We’ve always said we expect unchanged high risk provisions for 2013', Engels said. 'Nothing has changed about that except that today I’m actually a bit more positive than I was a few months ago, as are other market participants'.
Engels said the speculation triggered 'market technical reactions' that forced some shareholders to sell in order to comply with their own investment rules, according to the memo.
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