Commerzbank Expects Bad Loan Wave in Eastern Europe
According to Andre Carls the manager in charge of Commerzbank's business in
“We have seen a reduction in the flow of foreign capital into the region over recent months,” said Andre Carls. “That is a key issue for 2009. Risks will increase and with them, the risk provisions. That is not something that Commerzbank can escape.”
With the economies of many eastern European countries crushed by recession and the financial crisis, Commerzbank's position is looking increasingly uncomfortable. The global slump is also putting pressure on its core retail business.
Commerzbank owns about 70 percent of
Carls said, however, that the German lender remained committed to the region. “We don't have any plans to sell parts of the business,” he said, adding that expansion plans for BRE have been shelved for now in favour of cost cutting.
BRE's profits collapsed by 75 percent in the final three months of last year to under 8 million euros (USD10 million).