Feb. 7 (Bloomberg) -- Commerzbank AG, Germany’s second-biggest bank, had its rating put on review for a possible downgrade at Standard & Poor’s after the lender said it will post a fourth-quarter loss of 720 million euros ($970 million) on writedowns.
Standard & Poor’s will complete the review of Commerzbank’s long-term rating of ‘A’ within three months, once it receives more details about updated business and risk plans, analyst Harm Semder said in an e-mailed statement from Frankfurt today.
“We now believe Commerzbank’s process of re-balancing its business model may be more complex and more time-consuming than we previously assumed and that it may take longer to generate stronger and sustainable earnings,” Semder said.
Commerzbank, which is restructuring its consumer banking unit and exiting shipping and real estate funding, announced plans last month to cut as many as 6,000 jobs over the next four years to achieve an after tax return on equity of more than 10 percent at the core bank.
The company dropped 1.6 percent to 1.462 euros at 4:16 p.m. in Frankfurt, heading for the eighth day of declines, the longest losing streak in more than 18 months.
While the loss in the fourth quarter stemmed mainly from “one-time charges due to depreciation on deferred tax accruals,” Standard & Poor’s “believes that this loss also indicated that Commerzbank will generate far weaker profits in the future,” he said.
Commerzbank reported the quarterly loss, its largest in three years, three days ago after taking charges related to the sale of a unit and a tax asset writedown.
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