FRANKFURT Germany’s Commerzbank , in the midst of a leadership crisis, is set to post a loss for 2020, as it takes a writedown on loans to collapsed firm Wirecard and navigates the fallout from the COVID-19 pandemic.
Given provisions and charges for restructuring, the bank warned it “anticipates” a loss for the full year, having previously said its goal of turning a profit in 2020 was “very ambitious”.
The grimmer outlook follows a 21% decline in net profit in the second quarter and an increase in expectations for charges for credit losses for the full year.
The 150-year-old bank, which is still partially owned by the state after a bailout during the last financial crisis, is trying to regain its footing after the recent resignations of top leadership and a series of other setbacks.
“The effects of the coronavirus pandemic and the ongoing difficult economic conditions have persisted in the year to date and continued to have a significant impact on our earnings performance in the first half of 2020,” the bank said.
Net profit in the April-June quarter of 220 million euros ($260 million) was down from 279 million a year earlier but topped a consensus forecast of 95 million.
The bank said provisions for credit losses rose to 469 million euros from 178 million.
Some 175 million euros of that provision was related to Wirecard, the German payments company that collapsed amid an accounting scandal.
Commerzbank said for 2020 it expects charges for credit losses of between 1.3 billion and 1.5 billion euros, up from previous guidance of 1 billion to 1.4 billion euros.
Last month, Commerzbank was thrown into turmoil when CEO Martin Zielke and supervisory board chairman Stefan Schmittmann stepped down to give the lender a fresh start.
Hans-Joerg Vetter, the retired chief of a German regional bank, was elected this week as chairman, but its search for a CEO is still in progress.
The management shake-up resulted from a public campaign for change by one of the bank’s biggest shareholders, U.S. private equity fund Cerberus.
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