With bad debts soaring and its share price plunging, Commerzbank has had a tough few years. But now things are looking up. After a dismal 2002, Frankfurt-based Commerz returned to the black in the first quarter of this year with a profit of $201 million.
The bank's recovery is largely the work of Mehmet Dalman, the managing board member for investment banking. He slashed costs by more than 25% last year. While cutting staff, he integrated the corporate and investment banking operations. "By bringing them together, you cut costs and have a shot at high margins and cross-selling," says Dalman, 45. He also carved out a profitable niche for Commerzbank in the credit-derivatives business and boosted its trading operations -- which generated a profit of $270 million in the first quarter.
There have been a few bumps, but by all accounts Dalman has handled them well. Last October, Commerzbank was hit by unfounded rumors that the credit-derivatives division had racked up large losses. Dalman quashed the speculation. "I told the rating agencies they should come in and look at our books. We were 100% comfortable about our business," he says.
Dalman, who was born in Cyprus and studied international history at University of London, was lured to Commerzbank in 1997 after stints at several investment banks in London. He is the first foreigner to join the management board. Judging by his performance, Commerz made the right move in tapping this finance star.