COMMERZBANK AKTIENGESELLSCHAFT

Public Finance Commerzbank’s Asset Based Finance segment holds a large part of the
Bank’s government lending exposures. The Public Finance portfolio comprises receivables
and securities held in our subsidiaries Eurohypo AG and EEPK.
Borrowers in the Public Finance business (€55bn EaD) are sovereigns, federal states,
regions, cities and local authorities as well as supranational institutions. The main exposure
is in Germany and Western Europe.
The remaining Public Finance portfolio in the ABF segment is accounted for by banks
(€34bn EaD), where the focus is also on Germany and Western Europe (approximately 93%).
Most of the bank portfolio comprises securities/loans which to a large extent are covered by
grandfathering, guarantee/maintenance obligations or other public guarantees, or were
issued in the form of covered bonds.
The Public Finance portfolio, which was decreased by €20bn to €109bn in 2010, largely
by using maturities and also through active portfolio reduction, was further reduced in 2011
and amounted to €89bn at December 31, 2011. Overall we are targeting a reduction in public
finance exposures to below €70bn for the end of 2014.
Commerzbank’s sovereign exposure to Greece, Ireland, Italy, Spain and Portugal was
reduced from €16.8bn to €12.3bn over the course of the year (see table on page 61).
The future development of Public Finance is difficult to predict at the moment, since it
is strongly dependent on how the sovereign debt crisis develops and the related political
decisions.
Segment Portfolio Restructuring Unit (PRU) The PRU only manages assets that have been
classified as non-strategic by Commerzbank and are therefore being wound down. Bundling
allows these positions to be managed uniformly and efficiently. They consist mainly of structured
credit positions (essentially asset-backed securities − ABSs) with a nominal value of
€23.5bn as at December 31, 2011(see page 62 f.). This predominantly (around 80% of the
risk value 1 of €13.7bn) relates to investment grade securities.
The remaining positions in the PRU (correlation trading portfolio) were fully wound down
in the second quarter of 2011.
Cross-segment portfolio analysis
It is important to note that the following positions are already contained in full in the Group
and segment presentations.
Financial Institutions portfolio In 2011, the focus of the Financial Institutions sub-portfolio
continued to be both on proactive risk reduction across the whole portfolio, especially the
existing bonds in Public Finance, and on facilitating new business with clients of an adequate
rating level, through trade finance activities performed on behalf of our customers at
Mittelstandsbank. Consideration of country risks played a major part in this.
In the second quarter of 2011 there was a change in the definition of our Financial Institutions
portfolio. Exposures to selected institutions, such as the Federal Reserve Bank, the
European Central Bank and selected European issuing banks, which on account of their
specific function lie outside our risk management focus, were classified as “exceptional
debtors”, and were therefore excluded from the specific analysis of the Financial Institutions
portfolio. This exclusion resulted in a reduction of EaD in the amount of €13bn as at the
balance sheet date June 30, 2011. These exposures are still included in full in the presentation
of our Group portfolio in the section “Commerzbank Group by segment”.
1
Risk value is the balance sheet value of cash instruments. For long CDS positions it comprises the nominal value
of the reference instrument less the net present value of the credit derivative.
Financial Statements and Management Report 2011 59