Frankfurt am Main, December 03, 2012 -- Commerzbank AG's new group strategy for its core businesses will heighten short-term credit risks for its retail banking activities, says Moody's Investors Service in a new Credit Focus report published today. The plans, announced on 9 November 2012, involve substantial investment to remedy the shortcomings in the group's current structure, IT systems and processes. However, although the short-term risks are skewed to the downside, the adjustments could yield credit-positive developments for some of the bank's core segments in the medium to longer term, contingent on market and operating conditions.

The new report, "Credit Focus: Commerzbank Group: Low Visibility Ahead of Major Business Realignment Heightens Short-Term Credit Risks", is now available on www.moodys.com. Moody's subscribers can access this report via the link provided at the end of this press release.

Commerzbank's (deposits A3, negative; BFSR D+/BCA baa3, negative) new group strategy for its core businesses involves a plan to invest EUR2 billion (thereof 50% allocated towards the retail operations) over four years to address shortcomings in the group's current structure, IT systems and processes. Moody's says that based on these investments and strategic readjustments, Commerzbank aims to improve its relative market position and core earnings.

Over time, Commerzbank will also address the disproportionate allocation of capital resources to non-core areas. In this context, as of September 2012, Commerzbank's non-core assets (NCA) absorbed 34.5% of the group's total average capital employed. Of Commerzbank's most important segments Mittelstand (MSB) is the engine of stability and profitability and private customers (PC) is the worse-performing, whilst NCA encompasses the high-risk legacy assets of Commerzbank's earlier business ventures. Commerzbank's future franchise stability and earnings will principally depend on these three segments' performance.

Moody's says that Commerzbank's retail banking activities, have underperformed those of most of its peers, despite the extra scale provided by the Dresdner Bank acquisition in 2009. Moody's says that there are two key credit factors (1) the context of the strategic adjustments; and (2) the new deliverables and their associated credit risk.

THE CONTEXT OF COMMERZBANK'S STRATEGIC ADJUSTMENTS

Moody's believes that Commerzbank is under pressure to invest in its technology in order to maintain its position in Germany's increasingly fierce competitive landscape. Apart from adverse market-related factors, low clarity in Commerzbank's market positioning and its earlier risk culture had added to the pressures that triggered the various profound structural changes announced during 2012.

THE NEW DELIVERABLES AND ASSOCIATED RISK

Whilst Moody's views the targets as reasonable in principle, the transition period will occur in challenging operating conditions. The additional investments will burden the income statement further in the near term, and bear risks for the medium term if the set targets of a larger client base, higher wallet-shares and better efficiencies are not met. Moody's therefore notes that the ultimate success of the new core bank strategy remains uncertain at this stage, which is reflected in the negative outlook assigned to Commerzbank's ratings.

Subscribers can access this report via this link: http://www.moodys.com/research/Commerzbank-Group-Low-Visibility-Ahead-of-Major-Business-Realignment-Heightens-Credit-Focus--PBC_147831NOTE TO JOURNALISTS ONLY: For more information, please call one of our global press information hotlines: London+44-20-7772-5456, New York+1-212-553-0376, Tokyo+813-5408-4110, Hong Kong+852-3758-1350, Sydney+61-2-9270-8141, Mexico City001-888-779-5833, São Paulo 0800-891-2518, or Buenos Aires0800-666-3506. You can also email us at mediarelations@moodys.com or visit our web site at www.moodys.com.

Katharina Barten VP - Senior Credit Officer Financial Institutions Group Moody'sDeutschland GmbH An der Welle 5 Frankfurt am Main 60322 Germany JOURNALISTS: 44 20 7772 5456 SUBSCRIBERS: 44 20 7772 5454 Carola Schuler MD - Banking Financial Institutions Group JOURNALISTS: 44 20 7772 5456 SUBSCRIBERS: 44 20 7772 5454 Releasing Office: Moody's Deutschland GmbH An der Welle 5 Frankfurt am Main 60322 Germany JOURNALISTS: 44 20 7772 5456 SUBSCRIBERS: 44 20 7772 5454 (C) 2012 Moody's Investors Service, Inc. and/or its licensors and affiliates (collectively, "MOODY'S"). All rights reserved.

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