Saturday, March 30, 2013

Commerzbank annual report for 2012

Commerzbank, 2012, annual, report

As expected it was no fun to read the report from Commerzbank which can be found here. There were a few highlights but plenty of it was bad.

The good things:

By the look of it they managed to reach the targets set with the Basel III rules. This means that from now on they should be able to generate revenue that will be given hopefully back to shareholders instead of building up the capital in the bank but I fear... that they want to take that for themselves instead in form of bonuses... Their book value per share is still pretty high with  over 4€/share. I liked that no one in the board or management got any cash bonuses but there is a but there...

Bad things:

Claim that they want to focus on the classical banking business which sounds nice but that also decreased by 16% so I would say that they seriously failed on that one. I got annoyed when I saw how much pensions had been built up to the board and management. They get enough salaries that can save to their own freaking retirement. They got no cash bonuses but... they still managed to sneak out shares to themselves which diluted my stock also their base salaries increased by 50 (for the board members) to 260%(for the CEO) from 2011. And now the last thing from this year with raising enough capital to buy out the German government seems to be only for the purpose of being able to pay themselves bonuses. Shame on them! So from 2011 to 2012 the amount of stock were increased by 12%. They had also pushed some taxes forward from the past so this year they got a nice lump sum of 516M € that had to be paid. I did not manage to dig out how much and when they have to pay other lumps of taxes like that which they had pushed forward. They decreased their workforce with an additional 8% which... means fewer offices fewer people to take care with the customers so also not in line with going back to the basics of bank business.

What I seriously do not like is that Commerzbank are in my opinion cooking the books and I have started to discover that it is pretty common here in Europe with the bookkeeping rules. In the quarter reports they show an excellent results in Q1, the second quarter is acceptable, the third quarter is mediocre and the fourth is horrible. In their quarter reports they never show the individual quarter but only makes an add up from the previous quarter. If you don´t make the calculation yourself you will not even see how horrible it actually is.

So Q1 369M€ profit
Q2 275 M€ profit
Q3 78 M€ profit
Q4 -716 M€ loss

Totalling a full year profit of 6 M€ for the happy shareholders having 5.8 billions of shares and the 11 people in the board/management got to share 3 times as much so around 18 M€ without accounting for the hidden stock bonus. Does that look fair?

I my opinion the entire management and board of the Commerzbank should be kicked out especially for suggesting to raise equity capital to buy out the German government their basic salary levels should be brought back to what it was 2011. We need to bring in a competent management team there that takes the responsibility to build up a trust not only to the customers but also towards the shareholders. This will be done by creating a business that generates a profit that maybe three or five years from now can buy out the German government. Shame on them for being so selfish and looking with such a short time perspective!

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