Commerzbank

Emerging from the Mess

FILE - In this Nov. 3, 2009 file photo a person passes the new logo of German Commerzbank at the bank's headquarters in Frankfurt, central Germany. Commerzbank says Thursday, Nov. 7, 2013, third-quarter net income rose by 15 percent to 77 million euros (US dollar 104 million) as it cut costs and took fewer losses on shaky investments set aside for disposal. The figure beat analyst estimates for 44 million euros in net income. The bank's shares jumped 9.4 percent to 10.19 euros and led Germany's DAX blue-chip index in morning trading in Europe. (AP Photo/Michael Probst, File)
  • Why it matters

    Why it matters

    If Deutsche Bank cannot prove to investors and customers that it has cleaned up its act, it will continue to lose money and value, compared to other banks.

  • Facts

    Facts

    • Deutsche Bank, Germany’s largest bank, announced high losses last week and remains embroiled in numerous expensive lawsuits in the aftermath of the financial crisis.
    • Commerzbank, the second-largest bank in Germany, was bailed out after the financial crisis but has returned to profit after making cuts.
    • Soft factors including reputation, customer loyalty and appeal can form up to 60 percent of a bank’s value according to a study.
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    Audio

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The pecking order among Frankfurt’s banks used to be pretty clear-cut: first came the mighty Deutsche Bank, then came its smaller, weaker competitor, Commerzbank.

Deutsche Bank came through the financial crisis in pretty good shape, bouncing back to quickly earn billions while Commerzbank needed to be restructured – and had to be partially nationalized.

This relationship now appears to be shifting.

The new chief executive of Deutsche Bank, John Cryan, last week announced record losses of €6.8 billion, or $7.38 billion, and persuaded investors to accept two more lost years; shareholders won’t receive a dividend in 2015 and 2016. The supervisory board eliminated last year’s bonus for the whole executive board.

In contrast, for the first time since taking office in 2008, Martin Blessing, chief executive Commerzbank, was able to again promise his investors a dividend. The bank has set aside €0.20 per share and can afford to do so, having earned €850 million in the first nine months.

But the scales are shifting not only in terms of profits and dividends but also reputation.

Data collected by Stefan James Lang shows in terms of reputation, Commerzbank has now overtaken Deutsche Bank. Mr. Lang is the founder, owner and managing partner of ‎the Swiss-based European Economic Research Institute, which has been continually measuring the strength of the brands of the world’s top 800 banks since 2011.

Mr. Lang’s institute polls managing partners and board members. In contrast to private customers, who often only have a private bank account, this target group also uses corporate customer and asset management services. This means they know many of a bank’s facets – and belong to the core target group of institutions like Deutsche Bank and Commerzbank.

In 2012, the figures show that 40 percent of the 53,000 managers EUWIFO polled in 2012 still considered Deutsche Bank to be a good, or very good, financial institution. Thereafter, things consistently went downhill and by last year, only 28 percent still saw Deutsche in such a positive light.

The trend went upwards, though, for Deutsche’s rival, Commerzbank. In 2012, the bank’s approval rating was 23 percent; now, it’s up to 29 percent.

However, the bankers at Commerzbank shouldn’t rest on their laurels, especially when compared to how the reputation of savings banks and cooperative banking institutions. In the same period, these barely changed, sticking at between 55 and 60 percent, far higher than the two bigger banks.

Mr. Lang said banks shouldn’t underestimate soft factors like reputation. “Performance indicators like reputation, appeal, and customer loyalty are becoming more and more important,” he said. He added that depending how these factors are calculated, they can make up as much as 60 percent of the market value of many a bank.

 

To contact the author: maisch@handelsblatt.com

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