For Commerzbank, the paragon of successfully-rebounded banks might reside in Vienna. Its name is Bawag, an Austrian lender that has put losses, crises and risky speculative deals well behind it. Years ago, Bawag began to pivot away from investment banking to focus more on its retail business. This may have been a relatively boring choice from a banker’s perspective, but thanks to its rigorous frugality, Bawag has since become one of the most profitable banks in Europe.
The Austrians didn’t accomplish this feat on their own. They had help from the US hedge fund Cerberus Capital Management, which holds a majority stake in Bawag. Last week, this very same financial investor procured a modest stake in Commerzbank as well.
Cerberus owns only 5 percent of Germany’s second-largest bank, but investors hope the Americans will help to finally make Commerzbank more profitable nonetheless. After all, it’s been struggling on that front for quite some time. In spite of numerous restructurings, reconfigured strategies and savings programs, the bank’s management has only been moderately successful at turning things around – as evidenced by Commerzbank’s recent quarterly loss.