Commerzbank to write off €200m after scrapping outsourcing project with HSBC
Commerzbank has announced it is ending its project to outsource securities settlement to HSBC Transaction Services GmbH with immediate effect.
The project was originally announced back in 2017
The Frankfurt-based bank cites technical implementation risks and changed market conditions as the main factors behind its decision.
Commerzbank says it is anticipating “an exceptional write-off of around €200 million in the second quarter of 2021” as a result of the project closure, and has also set aside provisions in the “double-digit millions”.
It adds the write-off will not impact the liquidity or the Common Equity Tier 1 (CET1) capital of the bank.
The bank will instead look to keep its securities settlement in-house and modernise its own IT systems.
The partnership was originally announced back in 2017 as part of Commerzbank’s wider 4.0 strategy to digitalise the bank and cut costs.
However, the firm now says that the market and technological environment have undergone substantial change and keeping the process in-house “reduces complexity in its transformation”.
Commerzbank COO Jörg Hessenmüller says: “After careful consideration, we have taken the decision to stop the outsourcing project owing to the high implementation risks.
“The significant growth in trading volume and the ongoing technological development are allowing us to continue securities settlement profitably.”
The decision comes as new chief executive Manfred Knof plans to return Commerzbank back into the black after the bank lost €2.9 billion in 2020.
Knof is leading a planned €1.8 billion restructuring involving the cutting of jobs and the closing of branches.
