The European Commission informed the Federal Republic of Germany that it has changed the condition imposed on Commerzbank AG (CRZBY.PK) in 2009 to divest its unit Eurohypo into a condition to run down the company. Therefore, Commerzbank has to reduce in full both the state financing business as well as the bulk of the commercial real estate financing of Eurohypo. As per the conditions imposed by the European Commission, the non-core activities of Eurohypo (Public Finance and non-core areas in Commercial Real Estate) have to be clearly separated in organisational terms from the core activities.
The boards of Managing Directors of Commerzbank and Eurohypo have decided to implement the conditions of the European Commission such as the business areas Commercial Real Estate and Public Finance would be realigned in organisational terms, as well as in the future, the non-core activities would be managed in a new group-internal reduction unit named 'Non Core Assets'.
Commerzbank noted, "'The amended conditions of the EU Commission are challenging, but acceptable. We will consistently continue with the chosen course of a reduction in the Eurohypo portfolios. The objective is that of continuing a small, lower-risk area of the commercial real estate business in Commerzbank." According to the EU Commission's conditions, the Eurohypo brand has to be given up. While adapting to the changing business framework conditions, Eurohypo would be continued for the time being, and the new company name would be announced later.
Also, EU Commission's decision foresees other conditions like excepting the non-core activities, Commerzbank has to reduce its balance sheet to 600
billion euro as of the end of 2012 and it may not exceed this level until the end of 2014. In addition, the acquisition ban has been extended to the end of March 2014.
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by RTT Staff Writer
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