COMMERZBANK AKTIENGESELLSCHAFT

Group Management Report
140
84 Commerzbank Annual Report 2011
Capital and reserves
Commerzbank carried out a number of capital measures during the reporting period. In the
first quarter, hybrid equity investments were acquired as a contribution in kind in exchange
for new Commerzbank shares in order to optimise the capital structure. A two-stage capital
increase amounting to €11.0bn was executed in the second quarter. This increased the number
of outstanding Commerzbank shares to 5,113.4m. The Financial Market Stabilization
Fund (SoFFin) maintained its stake of 25% plus 1 share in Commerzbank after the transactions.
Including an amount of around €3.3bn out of free regulatory capital, Commerzbank
repaid a total of €14.3bn of silent participations to SoFFin. The €1.03bn one-off payment to
SoFFin in connection with the repayment of its silent participations and the costs of the capital
measure, which amounted to approx. €0.2bn, were recognised after tax and without P&L
effect directly in equity. Another capital measure was the repurchase of hybrid equity instruments
from investors in the fourth quarter.
The equity reported in the balance sheet at December 31, 2011 fell by 13.5%, or €3.9bn,
to €24.8bn compared with year-end 2010. The capital increase and reduction in the accounting
portion of the shares in subscribed capital from €2.60 to €1.00 triggered a significant
shift in equity. In 2011, subscribed capital rose by €2.1bn to €5.1bn and the capital reserve
increased by €9.7bn to €11.2bn. Retained earnings fell by €0.3bn to €8.8bn. Although
the measures to optimise capital increased retained earnings, the recognition of the compensation
payment to SoFFin in particular reduced the balance. The silent participations decreased
significantly following the partial repayment to SoFFin, falling by €17.2bn to €2.7bn.
On December 31, 2011, the revaluation reserve fell by €0.8bn to €–2.5bn. This was due in
particular to the sharp drop in the market value of Italian government bonds. Together with
the negative balances from the cash flow hedge reserve and currency translation, this
amounted to a deduction of €3.7bn from equity compared with €3.0bn at year-end 2010.
As at December 31, 2011, risk-weighted assets fell by €30.9bn compared with year-end
2010 to €236.6bn. This was due mainly to the reduction in non-strategic business and parameter
updates. The reduction was also linked to the regulatory requirements set down by
the European Banking Authority (EBA), under which Commerzbank must strengthen its Core
Tier I capital by June 30, 2012. The fall was all the more noticeable, as the Basel 2.5 requirements
applied in the fourth quarter, which pushed up risk-weighted assets by some €12bn,
but this effect was more than compensated for.
Regulatory Tier I capital decreased by €5.5bn to €26.2bn, compared with 2010. This was
largely the result of the partial repayment of the SoFFin silent participations out of free regulatory
capital of around €3.3bn and the one-off payment of €1.03bn made to SoFFin. The
Tier I capital ratio continued to be stable at 11.1%, compared with 11.9% at December 31,
2010. Core Tier I capital, which is a key variable in the context of Basel III, came to around
€23.4bn, or a ratio of 9.9%. Our own funds ratio was 15.5% on the reporting date.