Commerzbank Aktiengesellschaft - CMVM

Commerzbank Aktiengesellschaft 

Head-office: Kaiserplatz, 60261 Frankfurt am Main, Federal Republic of Germany 

A corporation according to the German Stock Corporation Act 

Registered Share Capital: EUR 1,554,430,813.00 

Commercial register number: HRB 32 000 

ANNUAL REPORT 2003

AVISO 

A Comissão do Mercado de Valores Mobiliários, ao abrigo do disposto no n.º 3 do artigo 

250º do Código dos Valores Mobiliários, dispensou a publicação das contas individuais. 

Os documentos de prestação de contas alvo desta dispensa encontram-se disponíveis 

para consulta, juntamente com os restantes, na sede do Commerzbank.

SECTION 1 

INDEX 

ANNUAL REPORT............................................................................................................................................1 

BALANCE SHEET .........................................................................................................................................85 

STATEMENT CHANGES IN EQUITY ...................................................................................................................86 

CHANGES IN MINORITY INTERESTS .................................................................................................................87 

CASH FLOW STATEMENT..............................................................................................................................88 

NOTES........................................................................................................................................................90 

AUDITOR’S REPORT ...................................................................................................................................172 

SUPERVISORY BOARD REPORT ...................................................................................................................173 

SECTION 2 

INDIVIDUAL ACCOUNTS OF COMMERZBANK AG ............................................................................................216 

SECTION 3 

EXTRACT FROM THE MINUTES OF COMMERZBANK GENERAL MEETING OF MARCH 31..........................................216 

SECTION 4 

INFORMATION ON COMPANIES WITH SHAREHOLDING INTERESTS ON THE ISSUER................................................217

annual report 2003

highlights of Commerzbank group 

Income statement 

2003 2002 

Operating profit (7 m) 559 192 

Operating profit per share (7) 1.03 0.36 

Pre-tax profit (7 m) –1,980 –372 

Net loss (7 m) –2,320 –298 

Net loss per share (7) –4.26 –0.56 

Operative return on equity (%) 4.9 1.6 

Cost/income ratio in operative business (%) 73.3 77.3 

Pre-tax return on equity (%) –17.4 –3.1 

Balance sheet 

31.12.2003 31.12.2002 

Balance-sheet total (7 bn) 381.6 422.1 

Risk-weighted assets according to BIS (7 bn) 140.8 160.2 

Equity as shown in balance sheet (7 bn) 9.1 8.8 

Own funds as shown in balance sheet (7 bn) 18.7 19.3 

BIS capital ratios 

Core capital ratio, excluding market-risk position (%) 7.6 7.5 

Core capital ratio, including market-risk position (%) 7.3 7.3 

Own funds ratio (%) 13.0 12.3 

Commerzbank share 

Number of shares issued (million units) 597.9 542.2 

Share price (7, 1.1.–31.12.) high 17.58 21.29 

low 5.33 5.04 

Book value per share *) (7) 17.37 18.98 

Market capitalization (7 bn) 9.3 4.0 

Customers 6,840,000 6,039,000 

Staff 

Germany 25,426 28,603 

Abroad 6,951 7,963 

Total 32,377 36,566 

Short/long-term rating 

Moody’s Investors Service, New York P-1/A2 P-1/A2 

Standard & Poor’s, New York A-2/A- A-2/A- 

Fitch Ratings, London F2/A- F2/A- 

* ) excluding cash flow hedges

structure of commerzbank group 

Group 

Management 

Staff 

departments 

● Accounting and Taxes 

● Compliance and 

Security 

● Corporate 

Communications and 

Economic Research 

● Financial Controlling 

● Group Treasury 

● Human Resources 

● Internal Auditing 

● Legal Services 

● Risk Control 

● Strategy and Controlling 

Retail Banking and 

Asset Management 

● Asset Management 

● Credit Operations 

Private Customers 

● Private Banking 

● Retail Banking 

Board of Managing Directors 

Corporate Divisions 

Banking 

departments 

Corporate and 

Investment Banking 

● Corporate Banking 

● Financial Institutions 

● Global Credit Operations 

● Multinational Corporates 

● Real Estate 

● Securities 

Domestic and foreign branch network 

Cooperation in bancassurance area 

Services 

Service 

departments 

● Global Operations 


● IT Development 

● IT Investment Banking 

● IT Production 

● IT Support 

● Organization 

● Transaction Banking 

● Hypothekenbank in 

Essen AG 

● Erste Europäische 

Pfandbrief- und 

Kommunalkreditbank AG 

● EUROHYPO AG 

● Korea Exchange Bank 

Group companies and major holdings 

● COMINVEST Asset 

Management GmbH 

● ADIG-Investment 

Luxemburg S.A. 

● AFINA Bufete de Socios 

Financieros, S.A. 

● Caisse Centrale 

de Réescompte, S.A. 

● CICM Fund Management 

Limited 

● Commerz International 

Capital Management 

(Japan) Ltd. 

● Jupiter International 

Group plc 

● Commerzbank Europe 

(Ireland) 

● Commerzbank 

International S.A. 


(South East Asia) Ltd. 


(Switzerland) Ltd 

● comdirect bank AG 

● COMMERZ PARTNER 

Beratungsgesellschaft für 

Vorsorge- und Finanzprodukte 

mbH 

● Commerz Service GmbH 

● BRE Bank SA 


(Budapest) Rt. 


(Eurasija) SAO 


(Nederland) N.V. 

● Commerz (East Asia) Ltd. 

● P.T. Bank Finconesia 

● Commerz Grundbesitzgesellschaft 

mbH 

● CommerzLeasing und 

Immobilien AG 

● CBG Commerz 

Beteiligungsgesellschaft 

Holding mbH 

● Commerzbank Capital 

Markets Corp. 

● Commerz Futures, LLC 

● Commerz Securities 

(Japan) Co. Ltd. 

● Commerz Business 

Consulting AG 

● pdv.com 

Beratungs-GmbH 

● SOLTRX Solutions for 

financial business GmbH 

● TC TrustCenter AG

‡ What happens if somewhere in the world a 

new trend appears? ‡ your phone rings ‡ you 

shouldn’t chase after opportunities, but rather meet them head-on. 

But who lets you know where things are happening and what’s 

promising? We do, for example. When we find something suitable, 

we tell you immediately. 

‡ ideas ahead ‡ 

////// www.commerzbank.com / //////////////////////////////////////////////////////////// 

‡ what do we do with funds that are better 

than our own? ‡ we get them into the team ‡ 

how does a successful team come about? You look for the best. And 

that’s precisely how we select our funds for you. For this purpose, we 

perform a completely neutral analysis of thousands of offers. And if 

the funds of other companies are interesting, we recommend them. 


‡ What should an optimal propertyfinancing 

deal look like? ‡ how you 

want it to ‡ Our mixture for an individual financing 

plan: a calculation of your financial possibilities, planning 

involving state promotion funds and attractive 

interest-rate conditions, and finally A thorough technical 

check of the object of your choice. This all adds up to a 

package ideally suited to your needs. 



‡ What if you have more important things to 

do than to go to your bank? ‡ then we simply 

come to you ‡ you can settle a lot of things by phone or 

online, but not everything. We prefer to discuss with you personally 

what is crucial for you. anywhere you wish. 


‡ With whom do german companies do the 

best deals abroad? ‡ with commerzbank ‡ 

SEDUS stoll ag, one of germany’s largest producers of office furniture, 

draws upon our experience. Just as other companies have 

for decades. That’s why we’re involved in 16% of germany’s overall 

external trade today. When are you coming to us? 



‡ it’s quite normal to be available for customers 

at all hours ‡ we think so, at any 

rate ‡ you can always reach us. By using our self-service zones 

and our extensive online services, Giving retail and corporate 

customers all they need in the way of banking. 


////// www.commerzbank.com / //////////////////////////////////////////////////////////// ////// www.commerzbank.com / //////////////////////////////////////////////////////////// ////// www.commerzbank.com / ////////////////////////////////////////////////////////////


or: how do we get our message across? 

In banking, the advertising “battle” for cus- The translation of the slogan 

tomers primarily takes place at the emotional into advertising takes account 

level: how can we position our Bank such that of the various target groups, 

our customers both have more trust in us and but addresses them in the 

think we are capable of more than our rivals? same tonality: for Commerz- 

/ 

bank, much is matter-of-course 

/ 

which for others is quite the 

Based on a broad survey of various target exception. Commerzbank has 

groups in Germany, France and Italy, we surprisingly straightforward 

have identified two key points distinguishing solutions for apparently complex 

us from our competitors: our customers are problems. Our advertising identi- 

relatively well satisfied with Commerzbank. fies the problem and presents a 

Non-customers imagine that, as a “small” convincing, target-group-oriented 

major bank, we are more flexible, creative solution. 

and act more quickly than our competi- / 

tors. 

/ 

/ 

The motifs used as images in our 

/ 

advertising – and which appear as 

The right positioning for Commerzbank illustrative material throughout this 

is, therefore: “Commerzbank is a cre- report – repeatedly show people in 

ative major bank. In an interactive situations that tell entire stories in 

relationship with customers and its combination with the headline. Ex- 

business associates, it offers the best citing, unusual, surprising and striking, 

financial services.” That is the starting but always in close touch with the 

point for all our advertising messages topic. We are the flexible bank which is 

and presentations. The core concept full of ideas in responding to customers’ 

“creativity” distinguishes us, for one wishes. The deliberate use of colour, 

thing, from our competitors and, for contrast and sharpness depicts reality 

another, it entails a promise. 

as more attractive and impressive than 

/ 

it actually is. Small is made larger and the 

/ 

normal more unusual. The campaign is 

Our slogan “ideas ahead” sums intended to make an impression; it should 

this up. It serves as a “heightened also polarize and arouse curiosity about 

translation” of the expectations Commerzbank. For we have ideas, and they 

placed in us and at the same 

time embodies what we offer 

customers by way of creative 

cooperation. It enhances the 

Bank’s attractiveness, makes it 

more sympathetic and arouses 

curiosity for its services. It has 

a motivating impact on staff, 

but also calls upon them to 

generate new ideas. 

get our customers ahead.

contents 

Management report 

Survey of the Commerzbank Group 6 

Corporate governance at Commerzbank 14 

Retail banking and asset management 20 

Corporate and investment banking 30 

Staff and welfare report 40 

Our share, strategy and outlook 46 

Risk report 52 

Financial statements of the Commerzbank Group 2003 

Overview 80 

Income statement 83 

Balance sheet 85 

Statement of changes in equity 86 

Cash flow statement 88 

Notes 90 

Group auditors’ report 172 

Report of the Supervisory Board 173 

Boards, seats on other boards, 

Group managers, managers of branches and Group companies 

Supervisory Board 177 

Central Advisory Board 179 

Board of Managing Directors 180 

Regional Board Members and CIO 182 

Group managers 183 

Managers of domestic main branches 184 

Managers of larger corporates centres 184 

Managers of foreign branches 185 

Board of Trustees of Commerzbank Foundation 185 

Managers of domestic Group companies 186 

Managers of foreign Group companies 187 

Regional Advisory Committees 188 

Seats on other boards 201 

Tables and charts 

Glossary 206 

Index 211 

Business progress 1968-2003 212 

Front inside cover: Structure of the Commerzbank Group 

Back inside cover : Commerzbank worldwide

Klaus-Peter Müller March 2004 

Chairman of the Board 

of Managing Directors 

Commerzbank is now a better bank. Step by step, we have made progress 

towards restoring a satisfactory level of profitability. Naturally, our customer 

and our employee orientation have not been overlooked in the 

process. Quite the contrary – these are essential if we want to be successful 

in the long term. We want to be a highly efficient, credible and 

trustworthy partner in financial matters for everyone, for the entire public 

at large. 

While the disappointment on the part of the employees affected is understandable, 

the cancellation as of December 31, 2004, of the Bank’s internal 

agreements on the company pension scheme based on the last net 

salary drew some very polemical, and for the most part poorly informed, 

commentaries in the public sphere. We were unable to communicate in 

an appropriate form and adequately the crucial point – namely, that our 

company pensions as well should be made calculable and should be 

maintained for future generations. 

In the meantime, we have held sober and constructive negotiations at our 

Bank. We are grateful to the staff council and the senior staff representatives 

for helping us to search for an adequate solution. Together with the 

central staff council, we had established the framework for a new definedcontribution 

company pension by mid-February. The details are to be 

agreed upon by mid-year.

We expressly support the institution of the company pension scheme as 

an ever more important pillar in Germany’s system of old-age provision. 

However, it is essential for companies that their future expenses – as part 

of their wage-related costs – can be calculated clearly and remain within 

a tolerable framework. 

We were quicker and better at convincing people as regards the outcome 

of our painful restructuring phase, which began in mid-2001. Now that 

existing capacities have been adjusted to the weaker demand for banking 

services, there is fresh scope for expansion which we are going to use in 

a selective manner. One example here is the recently agreed takeover of 

SchmidtBank. As a result, we have not only increased our customer base 

by about ten per cent, but have also strengthened our presence in an area 

where Commerzbank was previously hardly represented at all. 

Our capital base is strong enough to support further acquisitions or 

organic growth. Any restrictions in this respect tend to be imposed by the 

rigid “three-pillar structure” of the German banking market. It is still not 

possible to say whether and at what point politicians will be in a position 

to reform this – in our view – outdated model, which is unique among industrial 

nations. However, the international criticism on the part of the 

EU Commission in Brussels and the IMF in Washington has apparently 

triggered a process of rethinking, as has the attempt by the city parliament 

in Stralsund to sell the local savings bank. 

Commerzbank at any rate has completed its fitness cure and is now on the 

way to becoming the “first choice” for retail customers in Germany. We 

are focusing intensively on Mittelstand firms, as here, too, we intend to 

become the “number one” nationwide in this segment. At the same time, 

we want to be an interesting relationship partner for European larger 

corporates and multinationals. Admittedly, these are ambitious goals that 

can only be attained through the best service, excellent products and 

dedicated personnel. Nonetheless, these are also goals which we consider 

realistic.

Our shareholders will be able to measure the successes which we achieve 

step by step in the form of rising share prices and of dividend payments 

reflecting the Bank’s ever stronger earnings performance. 

Over the past few years, we have concentrated our international network 

of outlets and reshaped it with a view to the structures needed over the 

long term. In the United States in particular, we have been really successful 

and profitable for decades. In Central and Eastern Europe, we similarly 

have a network of branches and subsidiaries which are established 

in the market, giving us an outstanding starting position for the eastern 

enlargement of the European Union. We believe that the enlargement of 

the Union this May will give rise to further strong expansion in our business 

in this region. 

For years, it has been speculated in a broadly-based public debate that 

Commerzbank is too small to exist all by itself. But size is relative, and 

who knows what is the optimal size for a bank? 

At Group level, we serve just over 6.8 million customers. Too small? Our 

business volume stands at about 7380bn. Too little? Germany’s exports 

and imports added up to almost 71,200bn in 2003; roughly 16% of this 

total passed through the books of Commerzbank. Too small? Of course, 

such figures are no answer to the question. Rather, the right thing is to 

ask whether we will be in a position in the long run to achieve a reasonable 

return, in line with market rates, on the equity which Commerzbank 

employs. We have set ourselves the target of demonstrating this by 2005. 

The groundwork has been laid; that is why we look with confidence and 

assurance to an independent future for Commerzbank. We also owe this 

to our customers, to our employees and to our shareholders.

All the same, the management is also obliged to examine alternatives in 

the consolidation process that is taking place in the German and 

European financial market. Theoretically, very many possibilities exist; 

yet there are far fewer practical solutions. In the future as well, we will 

study all the realistic options. However, no one will remove from us 

the responsibility for embarking on the right course. In the final analysis, 

it is up to you, our shareholders, to decide to what extent – and indeed 

whether – you are satisfied with your investment in Commerzbank shares. 

We do not know what opportunities the future holds in store for us. But 

we are self-assured and strong enough to play an active role in the 

European banking market. 

I hope to be able to welcome you in large numbers to our Annual General 

Meeting in the Jahrhunderthalle Frankfurt on May 12. I will then present 

to you the interim report for the first quarter of 2004.

6 MANAGEMENT REPORT 

Germany: 

rebound in investment 

survey of the commerzbank group 

Mounting confidence in the world economy 

Expansionary monetary policy in the industrial nations and the related 

extremely low interest rates had their impact in 2003. Worldwide, the prospects 

for growth improved. Once again, the United States led the way, as monetary 

stimuli were reinforced there by massive tax cuts and public spending programmes. 

But there are signs that Asia, too, is regaining its former dynamic 

momentum, with China assuming a special significance as the region’s engine 

of growth. The foundations have been laid, therefore, for the world economy to 

expand rapidly in the current year. We expect real growth of 4.6%; world trade 

should expand even far more strongly. 

By comparison, Western Europe’s economic progress is modest. But here 

as well, economic activity emerged from its stagnation at mid-year or so. The 

development in Germany was crucial in this respect, where after declining in 

the first half of the year, GDP registered subdued growth from last summer 

onwards. Initially fuelled by brisk demand for exports, business investment also 

rose at long last in the final quarter after a lengthy interruption. We expect this 

rebound to continue throughout the current year, with the first positive effects 

of the economic upturn on the labour market probably being felt roughly as from 

the summer. 

For the financial markets, historically low interest rates combined with the 

expectation of an upswing were the forces which revived the stock market in 

particular. Worldwide, stock indices improved considerably; climbing by 37%, 

the DAX index was even one of the top performers. If the hopes of an upswing 

are fulfilled in Germany and the government does not slacken in its reform 

efforts, conditions for the financial markets, and consequently for banks as well, 

will continue to develop positively. 

Revaluation measures shape 2003 results 

Last autumn, we decided to free the Commerzbank Group from its unrealized 

losses. On the one hand, this helped set the stage for a sustained increase in our 

profitability. On the other, we have improved our position, enabling us to play an 

active, structuring role in possible changes in the banking landscape. 

4 

3 

2 

1 

0 

-1 

-2 

-3 

-4 

Real investment in machinery and equipment Ifo business climate 

(forecast as from 1 st quarter 2004) (trade and industry in western Germany) 

percentage change on year index 2000=100 

2001 2002 2003 2004 

100 

95 

90 

85

In our revaluation initiative, the unrealized losses identified in our securities 

and investments portfolio per September 30 were written down. This entailed 

reducing the book values of listed investments, which despite the recovery of 

prices since mid-2003 were still higher than their market values, to a value 

that can be realized in the market. Industrial participations were affected here 

as well as holdings in financial institutions, such as Mediobanca, Generali and 

Santander Central Hispano. 

We wrote other participations down to their fair value. These were primarily 

Eurohypo AG and our London asset-management subsidiary, Jupiter. In the case 

of Eurohypo, market conditions and business plans had changed so much since 

2002 that we deemed it necessary to adjust its valuation. This measure will 

directly affect our income statement in future. Our interest expenses will be substantially 

reduced, as this company is consolidated on an at-equity basis and the 

now lower write-downs on those components relevant for an IAS valuation are 

also deducted from our interest position. The reduction in goodwill at Jupiter 

will greatly help our Asset Management to return to profitability. 

The revaluation measures, for which we needed to use 72.3bn, gave rise to 

a large net loss for the year in our financial statements for 2003, which will be 

balanced by a withdrawal from the capital reserve. In order to compensate for 

the decline in our regulatory equity, we placed a capital increase without subscription 

rights in November, which raised a net amount of 7742m for us. 

All told, by revaluing our securities and investments portfolio we have 

removed sizeable burdens for the current year, thanks to lower amortization of 

goodwill and lower funding costs for our investments. 

Consolidated balance-sheet total at 7382bn 

In the course of 2003, the Commerzbank Group’s balance-sheet total shrank 

by 9.6% to 7381.6bn. The weak dollar accounted for 712bn of this decline. In 

addition, we systematically maintained our strategy of selectively reducing riskweighted 

assets. These were down by 12.1% to 7140.8bn. 

We trimmed interbank lending by 72.7bn to 751.7bn; claims on customers 

contracted by 710.1bn to 7138.4bn. 

In our investments and securities portfolio, which expanded by 3.9% to 

787.8bn overall, we mainly added to bonds, notes and other fixed-income securities. 

By contrast, the item Investments in associated companies was 35.8% 

lower. This was due, for one thing, to the amortization of goodwill at Eurohypo 

and, for another, to the transfer of our holding in Korea Exchange Bank to 

Investments. In the final quarter of last year, we sold part of our interest in KEB. 

At the same time, KEB effected a capital increase, to which we did not subscribe. 

This reduced our interest from 32.6% to 14.8%. Since this transaction, therefore, 

we have no longer included KEB on an at-equity basis. 

On the liabilities side, interbank borrowing fell by 719.7bn to 795.2bn and 

securitized liabilities by 78.7bn to 784.0bn. By contrast, we achieved a 74.3bn 

increase in customer deposits to 7100.0bn. Savings deposits advanced slightly 

by 7200m, but time deposits registered the strongest growth at 72.9bn. Attractive 

interest rates played a role here, which both the Parent Bank, Commerzbank 

AG, and comdirect used to gain new customers. 

SURVEY OF THE COMMERZBANK GROUP 7


Structure of provision for possible loan losses 

Equity slightly higher 

Per end-2003, we had equity as shown in the balance-sheet of 79.1bn, compared 

with 78.8bn a year earlier. The Bank’s capital ratios continue to exceed our target 

levels: at 7.3%, the core capital ratio remained at its year-earlier level; the own 

funds ratio rose to 13.0%. As a result of our clean-up, the revaluation reserve 

moved from –7769m at end-2002 to a current 71,240m. 

Marked improvement in operating results 

Our efforts – above all on the cost side – bore fruit last year. As against 7192m 

in the previous year, we achieved an operating profit of 7559m in 2003. 

However, net interest income made no contribution towards improved 

results, falling by 11.4% to 72.8bn. In addition to the weak dollar and the 

absence of interest income from Rheinhyp (roughly 7220m), the further reduction 

of risk-weighted assets made itself felt. While we managed to widen our 

average interest margin at the Parent Bank, this was not enough to compensate 

for the decline in volume. 

Provision for possible loan losses was down by almost 7240m from its level 

of 71.3bn in 2002. At the start of the year, we had assumed an amount of 71.2bn. 

Ultimately, we used 71,084m for provisioning purposes, even though the economic 

situation remained tight in 2003 and the number of insolvencies was even 

higher. We attribute the need for less provisioning to our further improved risk 

management and in particular to the reduction of bulk risks. We have also systematically 

scaled back latently endangered credits. In this way, we have not 

been involved in several of the major cases of insolvency that have occurred in 

recent years. 

We also managed a turnaround in our net commission income, which 

showed a small increase to 72.14bn after two years of decline. Above all, as 

from mid-year we benefited from a recovery in securities markets and also 

achieved growth in both foreign commercial business and payment transactions. 

We were also more successful with our trading profit than we had been a 

year previously; it was 35.5% higher at 7737m. We were able to draw upon our 

strength in equities business, which was also lifted by the emerging recovery of 

the markets. 

Commerzbank Group, in 7 m 2003 2002 2001 2000 1999 

Germany 813 946 555 529 522 

Abroad 260 365 325 148 89 

Global provision 11 10 47 8 78 

Total net provisioning 1,084 1,321 927 685 689

The Net result on the investments and securities portfolio reached 7291m, 

compared with a minus of 711m a year earlier. Among other things, we disposed 

of our interests in Buderus and T-Online. Write-downs were needed on 

only a limited scale following our clean-up last autumn. 

The Other operating result, which mainly comprises allocations to and reversals 

of provisions, as well as expenses and income from building and architects’ 

services, reached 7174m. In 2002, we achieved a much higher surplus on 

this item through the proceeds from the deconsolidation of Rheinhyp. 

Operating expenses practically 7650m lower 

The success of our two cost-cutting offensives is clearly underlined by the 

expense items in our income statement. Operating expenses fell by 12.5% to 

74.5bn. With this outcome, we realized our target for 2004 a year earlier than 

planned. 

At end-2003, we had a Group workforce of altogether 32,377, practically 4,200 

fewer than a year previously. Due above all to this development, personnel expenses 

were down by 8.8% to 72.4bn. 

We cut other operating expenses by 16.5% to 71.6bn and the depreciation of 

office furniture and equipment by 16.2% to 7475m. 

We will not relax our efforts to keep costs within very narrow limits. Precisely 

at times when we are focusing on earnings growth, we have to continue to 

watch costs closely. Only in this way will we achieve sustained success and permanently 

raise our profitability. 

The above-mentioned income and expenses yield an operating profit of 

7559m. From this, for one thing, goodwill amortization of 7110m has to be 

deducted. For another, we already recognized in the first quarter of 2003 restructuring 

expenses of 7104m for measures under our second cost-cutting offensive. 

Last but not least, the loss of 72.3bn resulting from our clean-up is included 

in the item Expenses arising from special factors. Once these items have been 

deducted, a pre-tax loss of –71,980m remains, as against –7372m in the previous 

year. 

In view of the sizeable loss, the 2003 tax position of 7249m seems too large 

at first sight – especially compared with a year earlier, when we showed tax 

income of 7103m. However, it should be noted here that some of our subsidiaries 

in Germany and abroad generated profits and paid tax on them. In addition, 

the large loss as a result of revaluation is not relevant for tax purposes. 

After tax expenses and minority interests of 791m have been deducted, the 

Commerzbank Group has a net loss for the year of 72.32bn, which will be balanced 

by a withdrawal from the capital reserve. As we are also posting a “zero” 

result at the Parent Bank, we are unable to pay a dividend for the 2003 business 

year. Holders of our profit-sharing certificates will receive a full payment. This 

expense is covered in our 2003 interest position. 

SURVEY OF THE COMMERZBANK GROUP 9


Operating profit, 

by segment 

in 7 m 

Uneven development of segments 

In Retail Banking, the upswing that had begun in 2002 gathered momentum. 

However, revenues are developing very unevenly. Net interest income was lower 

than a year earlier, in line with the general trend. This means that the wider 

average margin achieved on the credit side was not enough to offset the reduction 

in volume, and the margin we realized on borrowed funds sank, due to the 

low level of interest rates. On the other hand, net commission income rose by 

12.6%. Here, our attractive range of real-estate funds, certificates and reverse 

convertibles compensated for the weaker demand for equities in the first half of 

the year. 

Especially noteworthy is the 11.0% fall in operating expenses. The operating 

profit rose from 753m in 2002 to a sizeable 7258m. The operative return on 

equity increased from 3.2% to 14.3% and the cost/income ratio receded from 

almost 90% to 79.2%. 

We believe that Asset Management is also developing really well, even 

though its net commission income was down by 14.2%. Here, the revenues from 

Montgomery Asset Management and Commerzbank Asset Management Italia 

were missing in 2003. We have sold both companies. Our consolidation measures 

showed a positive impact on the cost side: operating expenses fell by no 

less than 28.3% to 7345m. 

Consequently, the operating result rose substantially, from 713m to 790m. 

The return on equity improved from 1.6% to 14.1% and the cost/income ratio 

from 97.4% to 79.3%. 

In the Corporate Customers and Institutions segment, the heavy dependence 

on economic performance and interest rates was felt. Net interest income 

declined by 20.6%. The volume of lending contracted; to some extent, this was 

quite deliberate due to our active clean-up of the loan portfolio; at the same 

time, though, it was also involuntary because of the low dollar and companies’ 

weak investment activity. 

Despite flat economic activity, our early-warning systems made it possible 

to reduce provisioning considerably. Net commission income was also encouraging, 

rising 19.8% to 7726m, thanks to intensive and creative sales efforts. 

500 

400 

300 

200 

100 

0 

-100 

-200 

-300 

2002 

2003 

Retail 

Banking 

Asset 

Management 

Corporate 

Customers and 

Institutions 

Securities Group 

Treasury 

Mortgage 

banks

The decline in operating expenses, at –4.6%, was not as strong as in the other 

segments. For this reason, lower earnings could not be compensated for, which 

meant that the operating profit was down 21.6% in a year-on-year comparison. 

At 75.2bn, by far the greatest part of our equity is tied up in this segment. The 

return on equity sank from 8.5% to 6.9%, while the cost/income ratio rose from 

45.9% to a still very good 49.8%. 

The largest swing in operating profits was registered by Securities. Both net 

interest and net commission income were lower, but the trading profit was 

raised by 56.6% to 7783m. 

As operating expenses were brought down substantially – principally 

through staff reductions – the operating profit achieved a plus of 73m, after a 

minus of 7296m a year previously. This meant a return on equity of 0.3%, as 

against –22.7%, and a cost/income ratio of 99.7%, as against 136.1%. 

At Group Treasury, revenues were 15.5% higher than a year earlier, while 

operating expenses receded by 20.0%. The operating profit rose sharply, therefore, 

to 7220m. With only a small amount of equity tied up, a return of 203.7% 

was registered, as against 100.6%, and another very low cost/income ratio of 

20.3%, as against 29.3%. 

Comparison with the previous year is difficult in the case of the mortgage 

banks. In the first seven months of 2002, namely, Rheinhyp was included with 

its consolidated figures. Since August 2002, this segment has comprised 

Hypothekenbank in Essen, Erste Europäische Pfandbrief- und Kommunalkreditbank 

in Luxemburg and Eurohypo, which is consolidated at equity. These institutions 

achieved quite a good operating profit of 7242m overall. This gave rise 

to a return on equity of 27.3%, compared with 14.6% a year earlier. The cost/ 

income ratio is traditionally low in this segment, reaching an extreme low of 

10.2% (as against 22.4%) in 2003. 

Within the Group as a whole, the operating profit of 7559m led to an operative 

return on equity of 4.9%. A year earlier, it had been 1.6%. The cost/income 

ratio improved from 77.3% to 73.3%. 

SURVEY OF THE COMMERZBANK GROUP 11 

Mortgage banks 

2003 

Equity tied-up (7 m) 888 

Operative return 

on equity 27.3% 

Cost/income ratio in 

operating business 10.2%


Development in individual quarters 

2003 financial year 

7 m Total 4 th quarter 3 rd quarter 2 nd quarter 1 st quarter 

Net interest income 2,776 663 662 746 705 

Provision for possible loan losses –1,084 –256 –273 –303 –252 

Net interest income after provisioning 1,692 407 389 443 453 

Net commission income 2,136 591 509 516 520 

Net result on hedge accounting 40 3 12 15 10 

Trading profit 

Net result on investments 

737 121 107 278 231 

and securities portfolio 291 68 64 54 105 

Operating expenses 4,511 1,113 1,078 1,141 1,179 

Other operating result 174 15 98 29 32 

Operating profit 559 92 101 194 172 

Regular amortization of goodwill 

Profit from ordinary activities before 

expenses arising from special factors 

110 21 29 30 30 

and restructuring expenses 449 71 72 164 142 

Expenses arising from special factors 2,325 – 2,325 – – 

Restructuring expenses 

Profit from ordinary activities after 


104 – – – 104 

and restructuring expenses –1,980 71 –2,253 164 38 

Extraordinary profit – – – – – 

Pre-tax profit –1,980 71 –2,253 164 38 

Taxes on income 249 139 30 78 2 

After-tax profit –2,229 –68 –2,283 86 36 

Profit/loss attributable to minority interests –91 –20 –22 –16 –33 

Net loss/profit for the year –2,320 –88 –2,305 70 3

2002 financial year 

SURVEY OF THE COMMERZBANK GROUP 13 

7 m Total 4 th quarter 3 rd quarter 2 nd quarter 1 st quarter 

Net interest income 3,133 678 721 861 873 

Provision for possible loan losses –1,321 –323 –436 –308 –254 

Net interest income after provisioning 1,812 355 285 553 619 

Net commission income 2,120 490 501 554 575 

Net result on hedge accounting –56 –54 –21 51 –32 



544 91 36 104 313 

and securities portfolio –11 368 –531 60 92 

Operating expenses 5,155 1,220 1,229 1,308 1,398 

Other operating result 938 2 884 40 12 

Operating profit 192 32 –75 54 181 




108 25 26 29 28 

and restructuring expenses 84 7 –101 25 153 

Expenses arising from special factors 247 247 – – – 




209 177 32 – – 

and restructuring expenses –372 –417 –133 25 153 

Extraordinary profit – – – – – 

Pre-tax profit –372 –417 –133 25 153 

Taxes on income –103 –141 –20 6 52 

After-tax profit –269 –276 –113 19 101 

Profit/loss attributable to minority interests –29 33 –16 –17 –29 

Net loss/profit for the year –298 –243 –129 2 72


Corporate governance 

at commerzbank 

On February 25, 2002, an independent commission set up by the German government 

presented the German Corporate Governance Code for the first time. 

It describes key statutory provisions for the management and supervision of 

German listed companies and embodies internationally and nationally recognized 

standards for good and responsible governance. The Code makes the German 

system of corporate governance transparent and understandable. At the 

same time, it is designed to promote the trust of international and national 

investors, customers, employees and the general public in the management and 

supervision of German listed companies. 

Responsible corporate governance has always been a high priority at 

Commerzbank. That is why we – the Supervisory Board and Board of Managing 

Directors – expressly welcome and support the Code as well as the goals and 

objectives which it pursues. On February 4, 2003, we issued our annual declaration 

of compliance pursuant to Art. 161, German Stock Corporation (Aktiengesetz) 

and published it on the internet. In it, we stated that, with one exception, 

we have complied with all the recommendations of the Code. The single exception 

relates to section 5.3.2., according to which the Audit Committee of the 

Supervisory Board should also deal with risk-management issues. We have 

entrusted these functions to the Risk Committee, which for years has dealt with 

the Bank’s credit and market risks. 

Even at the time of publication of the German Corporate Governance Code, 

the articles of association of Commerzbank AG as well as the procedural rules 

of the Board of Managing Directors and Supervisory Board complied with its 

requirements for the most part. To the extent necessary, we have adapted the 

articles of association of Commerzbank AG and also the procedural rules for the 

Board of Managing Directors and the Supervisory Board to the regulations of the 

Corporate Governance Code. The changes in the articles of association were 

resolved by the AGM on May 30, 2003. 

German Corporate Governance Code as amended in July 2003 

In July 2003, a partly revised version of the German Corporate Governance Code 

was published in the Federal Gazette (Bundesanzeiger). We subsequently examined 

our own code and updated our declaration of compliance on November 11, 

2003. Overall, we deviate from three of the Code’s recommendations. In addition 

to the already existing deviation from section 5.3.2, two new ones have arisen 

through the amendments to the German Corporate Governance Code:

Pursuant to section 4.2.2, the full Supervisory Board should discuss and regularly 

examine the structure of the system of compensation for the Board of 

Managing Directors. The Supervisory Board has entrusted matters related to 

compensation to the Presiding Committee, which independently resolves upon 

and deals with them. This procedure has proved successful. The Presiding Committee 

discusses the structure of the system of compensation, regularly examines 

it and determines the amount of compensation for members of the Board 

of Managing Directors. It regularly reports to the full Supervisory Board on its 

deliberations and decisions in this connection. 

Section 4.2.4 recommends that the compensation of the members of the 

Board of Managing Directors should be reported in the Notes to the consolidated 

financial statements, subdivided according to the various components and presented 

in individualized form. In the Notes on page 161f., we present their compensation 

subdivided according to fixed amount, variable performance-related 

components and long-term incentive components, but not in individualized 

form. The total compensation of the Chairman of the Board of Managing Directors 

alone is shown separately. This enables shareholders to infer the compensation 

received by the other members of the Board of Managing Directors, thus 

representing in our opinion a good compromise between shareholders’ desire 

for information and the protection of the personal rights of board members. 

Principles of the system of compensation 

The compensation of the members of the Board of Managing Directors is made 

up of a fixed remuneration and a variable bonus, based on the Group’s business 

success and the attainment of individual targets. In addition, there is remuneration 

in kind on the usual scale and possibly remuneration for board functions at 

subsidiaries. Details can be found in this annual report on page 161f. In addition, 

like other executives and selected staff of the Group, the members of the Board 

of Managing Directors are able to acquire “virtual” stock options which run for 

three to five years under so-called long-term performance plans (LTPs). The 

exact structure of these LTPs is explained on page 102f. of this annual report. 

Details of the current value of these options may be found on page 162. The 

structure of compensation was not altered in the past year. 

Suggestions of the German Corporate Governance Code 

We comply with virtually all the suggestions of the German Corporate Governance 

Code, deviating from them in only five points: 

In section 2.3.4, it is suggested that the Annual General Meeting be broadcast 

in its entirety via internet. We make it possible to follow the speeches of the 

Chairman of the Supervisory Board and the Chairman of the Board of Managing 

Directors. The general debate is not broadcast. For one thing, this seems inappropriate 

given the length of our Annual General Meetings; for another, we do 

not want to infringe upon the personal rights of the individual speaker. 

CORPORATE GOVERNANCE AT COMMERZBANK 15


Section 3.6 of the German Corporate Governance Code suggests that separate 

meetings to prepare Supervisory Board meetings should be held regularly 

for the representatives of the shareholders and the employees. We arrange such 

preparatory meetings only if the need arises. 

Section 5.3.2 suggests that the chairman of the Audit Committee should not 

be a former member of the Board of Managing Directors. We have not adopted 

this suggestion as we are interested especially here in the expertise of the person 

in question. 

The suggestion contained in section 5.4.4 that the members of the Supervisory 

Board should be elected at different dates and for different periods of 

office is not compatible with the German system of co-determination. Employee 

representatives, namely, have to be elected at the same time for five years. The 

suggestion could only be applied, therefore, in the case of shareholder representatives 

and would lead to unequal treatment. 

Last but not least, the German Corporate Governance Code suggests that 

the variable compensation of Supervisory Board members should be linked 

to the long-term performance of an enterprise. At Commerzbank, variable compensation 

is bound up with the dividend payment. We consider this to be a 

transparent and readily understandable system. 


The Board of Managing Directors is responsible for the independent management 

of the Company. In this function, it has to act in the Company’s best interests 

and is committed to increasing the sustainable value of the Company. 

It develops the Company’s strategy, coordinates it with the Supervisory Board 

and ensures its implementation. The Board of Managing Directors conducts 

Commerzbank’s business activities in accordance with the law, the articles of 

association, its procedural rules and the relevant employment contracts. It 

cooperates on a basis of trust with the other bodies of Commerzbank and with 

the employee representatives. 

The composition of the Board of Managing Directors and the responsibilities 

of its individual members are presented on pages 180-181 of this annual report. 

Supervisory Board 

The Supervisory Board advises and supervises the Board of Managing Directors 

in its management of the Company. It conducts its business activities in accordance 

with the legal provisions, Commerzbank’s articles of association and its 

procedural rules; it cooperates closely and on a basis of trust with the Board of 

Managing Directors. The Supervisory Board regularly examines the efficiency of 

its activities, at least every two years. 

The composition of the Supervisory Board and its committees is presented 

on page 177f. The report of the Supervisory Board on pages 173-176 provides 

information on the work of this body, its structure and its control function.

Accounting 

For accounting purposes, the Commerzbank Group uses the International 

Accounting Standards (IAS), whereas HGB rules are still applied in the case of 

the individual financial statements of Commerzbank AG. The consolidated and 

Parent Bank financial statements are prepared by the Board of Managing Directors 

and approved by the Supervisory Board. The audit is performed by the auditors 

appointed by the Annual General Meeting. The annual financial statements 

also include a detailed risk report, providing information on the Company’s 

responsible handling of the various types of risk. It appears on pages 52-79. 

Shareholder relations and communication 

Once a year, the Annual General Meeting of shareholders takes place. Above all, 

it resolves upon the appropriation of the distributable profit, approves the 

actions of the Board of Managing Directors and Supervisory Board and authorizes 

the Board of Managing Directors to undertake capital-raising measures. 

Each share entitles the holder to one vote. 

Our shareholders are regularly – four times a year – informed about the 

Bank’s financial position and earnings performance; further corporate news 

items that are relevant for the share price are published in the form of a so-called 

ad hoc release. By means of press conferences and analysts’ meetings, the 

Board of Managing Directors reports on the annual financial statements or the 

quarterly results. For reporting purposes, we increasingly use the possibilities 

offered by the internet; at www.commerzbank.com, those interested can find a 

wealth of information on the Commerzbank Group. We feel committed to communicating 

in an open and transparent manner with our stakeholders. We intend 

to realize this claim in the future as well. 

Frankfurt, March 23, 2004 

Commerzbank Aktiengesellschaft 

The Board of Managing Directors The Supervisory Board 

CORPORATE GOVERNANCE AT COMMERZBANK 17

‡ what do we do with funds that are better 

than our own? ‡ we get them into the team ‡ 

how does a successful team come about? You look for the best. And 

that’s precisely how we select our funds for you. For this purpose, we 

perform a completely neutral analysis of thousands of offers. And if 

the funds of other companies are interesting, we recommend them. 

‡ ideas ahead ‡


Retail Banking 

department 

2003 

Equity tied-up (7 m) 1,804 




operating business 79.2% 

Retail banking and 

asset management 

The business lines which form Retail Banking and Asset Management continued 

their restructuring and consolidation efforts in 2003, for the most part completing 

them successfully. The segment reporting figures provide impressive evidence 

that we embarked on the right course with these measures. 

Retail Banking department 

Thanks to excellent sales performance and the “play to win” restructuring programme 

introduced in 2002, break-even point was reached in 2003. At 7258m, 

the operating profit was well ahead of our medium-term planning. Despite the 

persistently difficult market environment and the reduced sales force, revenues 

were held at their year-earlier level. This translates into a productivity increase 

of over 20%. 

The pilot phase of the bank agency, the advisory branch model with automatic 

cash-desk functions available on a 24-hour basis, was launched last year. 

After the test phase has been successfully completed, the bank agency will 

enable us to extend our geographical presence in selected locations efficiently 

and in a cost-conscious manner. 

Successful against market trend 

While the number of bank accounts in Germany has been reduced by 9.4 million 

over the past twelve years, Commerzbank has managed to hold its market share 

steady against this trend over the past ten years. In securities and lending business 

in particular, Commerzbank has expanded thanks to the individualized and 

professional advice it offers. 

Commerzbank an ideas laboratory 

Talks with customers and market research have prompted us to examine the 

subject of general financial knowledge. For despite a high degree of competence, 

many customers seem to have a deep-rooted uncertainty with regard to 

financial topics. In Commerzbank's “ideas laboratory”, therefore, independent 

experts are exploring topics related to personal finances. The experts formulated 

the demand for a canon of general financial knowledge. This triggered a debate 

in society which attracted great attention in both the media and the political 

sphere. In restructuring its advisory processes, the Bank has already anticipated 

the outcome and is, for example, systematically focusing on a comprehensive 

structured survey of demand. The ideas laboratory will continue to pursue the 

topic of general financial knowledge inside and outside the Bank. 

We are translating the “ideas ahead” claim into innovations in the areas of 

advice and products. Our goal here remains to offer customers all financial services 

under a single roof – regardless of whether these are our own products or 

products provided by others.

Pioneer in selling third-party funds 

In order to increase the quality of advice and customer satisfaction, we have 

added the investment funds of other institutions to our range. In May 2001, we 

recommended the first non-Group fund, the Fidelity European Growth Fund. In 

the meantime, half of our recommended investment funds are not produced by 

ourselves. 

By deciding in favour of open architecture, Commerzbank has assumed a 

pioneering role among Germany’s major banks. Last year, third-party investment 

funds already accounted for 37% of the overall net inflow. When selecting its 

own or third-party products, Commerzbank also takes into consideration the 

assessments of external rating agencies. This procedure leads to a high-quality 

range of funds on offer and makes objective, customer-oriented advice possible. 

Attractive products for retail investors 

Close contact with our customers is an important element in creating attractive, 

innovative products. In 2003, we were especially successful with our portfolio 

insurance funds. Our Best End Certificate, for example, enables customers to 

dispose of investments before they reach maturity at the highest possible price 

– a frequently expressed wish of investors in times of volatile markets. 

The ADIG Total Return Product is also a response to the uncertain situation 

in securities markets. By means of flexible investment in equities and bonds, the 

investor can benefit from interest-rate changes or rising share prices according 

to market phase. What is more, the fixed-income element serves to secure the 

investment and the achieved gains. 

The Comas Unlimited Certificate offers even more protection against market 

movements; it systematically decouples itself from the short-lived performance 

of the equity, bond and foreign-exchange markets. For this purpose, the certificate 

is based on an index characterized by a broad diversification in professionally 

managed hedge funds. The investment goal is simple: a steady return of 

roughly 10% p.a. with a narrow fluctuation band of 3-6%. With these product 

innovations, Commerzbank is making available to retail investors a major bank’s 

extensive knowledge of capital-market instruments. 

In 2003, Commerzbank also became the first bank to bring to the market a 

special interest-rate product of KfW for retail customers. This represented an 

innovative approach in property financing to making state promotion available 

to retail customers, providing home buyers with very reasonable market conditions. 

Strong growth surge for bancassurance 

We built further upon our successful cooperation with our strategic partner, the 

AMB Generali group. This was above all thanks to the activities of our mobile 

advisers for old-age provision and building finance under the roof of our joint 

subsidiary CommerzPartner. In connection with a sales offensive in the 

branches, we managed to boost the volume of life insurances sold by 50% to 

7760m last year. The rise in home-loan savings by 70% to 7660m was even more 

marked. We believe that we are well equipped for the future as well, therefore, 

to participate successfully in the growing market for old-age provision. 

RETAIL BANKING AND ASSET MANAGEMENT 21


Fresh expansion of customer base in branch business 

In 2003, too, we stepped up our activities to gain new customers. A series of 

innovative sales measures produced over 100,000 extra customers for the Bank. 

New customers were offered an attractive deposit interest rate. This was the first 

time that the Bank had used an incentive to make the changeover and test phase 

easier for new customers. 

The strategic cooperation with TUI has been extended until 2012. About 

450,000 TUI card-holders use Commerzbank credit cards. A systematic programme 

for contacting customers and offering products is designed to bind this 

group even more closely to Commerzbank. Thanks to its many years of good 

experience with TUI, Commerzbank is now a professional partner for further 

cooperation agreements of this kind. 

Steady expansion in online banking 

Since its launch in 1997, commerzbanking.de, the virtual branch for retail customers, 

has met with ever greater interest. In mid-2003, commerzbanking.de 

was geared more strongly to sales and acquiring new customers; since then, it 

has offered not only a broad range of information but also non-customers the 

opportunity to conclude their banking transactions online. By end-2003, more 

than 500,000 customers were taking advantage of the possibility to effect banking 

transactions in this form. With comdirect bank included, we are one of the 

leading providers in the German market, with roughly 1.2 million online-banking 

customers. 

Growth initiative “grow to win” 

The encouraging result of Retail Banking in 2003 shows that the turnaround has 

been achieved through a sustained reduction of costs and an increase in productivity. 

On the way to becoming the best bank nationwide for retail and business 

customers, we now need a sustained growth strategy. That is why we have 

followed “play to win” in quick succession with a programme that, for one thing, 

significantly optimizes the business model (excellence) and also generates 

sustained growth. Through the “grow to win” programme, we intend to achieve 

and hold a result that, independently of market performance, is on a par with our 

target return. 

International benchmarks in retail banking show that operative excellence is 

the decisive success factor in retail business and the necessary condition for 

profitable and sustained growth. 

Naturally, we are constantly examining whether we can expand through 

selective acquisitions. We took our first step in this direction by purchasing the 

branch operations of SchmidtBank with its roughly 360,000 retail customers. 

We are sure that we can lay the foundations for profitable expansion in retail 

business with this programme.

comdirect achieves best result since it was formed 

In the 2003 business year, comdirect bank achieved a pre-tax consolidated profit 

of 739.1m – easily the best since the bank was formed in 1994. In a year-on-year 

comparison, this meant an improvement of 757.7m. The result enables 

comdirect to make its first dividend payment. The management board will propose 

to the annual general meeting on April 28, 2004, that a dividend of 70.16 

per share be paid. 

The increase in results can mainly be traced to two effects: for one thing, 

operating expenses were significantly reduced again, by almost 19% to 

7112.5m; for another, comdirect generated higher commission income. This is 

above all due to the “com one programme for the future”, introduced in 2002, 

with which comdirect has stabilized its revenues, lowered costs and streamlined 

structures. 

Compared with the previous year, its customer base expanded by almost 

18,000 to reach 640,220 at group level. As a result, comdirect continues to be 

Germany’s market leader in online investment. Its UK subsidiary, comdirect ltd., 

increased its number of customers to 49,700. 

Securities markets have steadily recovered from their low levels. With a yearon-year 

rise of 11.8% in securities orders, comdirect benefited to an aboveaverage 

extent from this development. Its net commission income reached 

783.1m, representing a 7.7% increase on the previous year. However, net interest 

income before provisioning declined by 10.5% to 757.2m. Apart from the 

lower level of interest rates, the rise in interest paid was instrumental in this 

respect, fuelled by special campaigns to acquire new customers. This was 

prompted by the conviction that investing in attractive interest-bearing products 

is an efficient way to gain new customers. While interest expenses rose, the 

bank took in 7800m in funds and acquired roughly 25,700 new customers. The 

total assets under custody expanded altogether by 73.4bn to 710.4bn, thus 

reaching their highest level in three years. 

In response to the needs of its customers, comdirect bank established and 

built up two further strategic pillars in the 2003 business year – parallel to the 

ongoing extension of its Online Investment services. In its Direct Banking field of 

competence, it bundles the products for short-term financial investments and 

modern payments. In its Financial Advisory field of competence, comdirect looks 

after its customers’ needs in the area of old-age provision and asset accumulation. 

For this purpose, its comdirect private finance AG subsidiary was formed 

in 2003. It opened its first office in Munich on October 1, 2003. Hamburg and 

Düsseldorf followed in the same year, Frankfurt in January 2004. By implementing 

this three-pillar strategy, comdirect is realizing its objective of being the bank 

for the modern investor. It combines the efficiency of the online-based business 

model with an individual, personal and all-inclusive service for the customer. 

The share price of comdirect rose by 182% in the 2003 financial year. The 

share thus registered the strongest performance in the MDAX index, in which 

comdirect was included in September as the only bank with an online-based 

business model. 




department 

2003 






Private Banking department 

In 2003, the Private Banking department was able to build upon its position as 

one of the three leading institutions in German private banking. The basis for 

this success is the all-inclusive service which excellently qualified private-banking 

advisers provide for our wealthy clients. Drawing upon the support of systematic 

analytical instruments, they develop specific solutions for each individual 

customer. Further factors in our success last year were the good performance 

of our portfolio management and the innovative additions to our range of 

products. The private-banking units in Switzerland, Luxembourg and Singapore 

are also able to look back upon a successful year. In 2004 as well, Private Banking 

will continue to pursue a growth course thanks to selective investment in 

closer contact with clients, product innovations and advisory services. We are 

confident that these measures will enable us to acquire further new customers. 

Asset Management department 

At end-2003, Asset Management had altogether 783.3bn of assets under custody. 

By far the greater part of this amount is concentrated at our European production 

units in Frankfurt, London and Paris. The Frankfurt-based COMINVEST, 

formed in 2002, managed considerably more than half of the total assets under 

management for its private and institutional customers. 

In the past financial year, we altered our previous approach in Italy and sold 

our Commerzbank Asset Management Italia unit. As part of our European focus, 

we also disposed of our American subsidiary Montgomery Asset Management, 

thus withdrawing entirely from the United States in this segment. The two disposals 

removed a sizeable burden from the cost side in Asset Management. 

COMINVEST achieves positive result 

Even after all the costs and amortization had been deducted, we achieved a distinctly 

positive result with COMINVEST in the first year of its existence, thanks 

to optimized procedures and effective cost management. With the administration 

and service units in Luxembourg, Dublin and Munich included, which 

belong to the COMINVEST group, an amount of 728m emerges. In addition, we 

launched numerous initiatives to extend our market- and customer-based activities 

and to improve our market position. 

Retail funds back in favour 

Despite a persistently difficult market situation and investors’ continuing uncertainty, 

the retail funds arm of the COMINVEST group with its ADIG brand managed 

to generate a positive net inflow of 7493m in its high-earning securities 

funds in 2003. Customers and distribution partners were especially attracted to 

our successful portfolio insurance funds such as the ADIG Europa Invest family 

with its inflows of 7346m, our established bond-based funds and also the newly 

issued ADIG Total Return Protect, with an inflow of 7340m. The funds under 

management expanded from 723.8bn to 724.4bn last year. This was partly due 

to the revitalization of the ADIG brand through sponsorship of the long-established 

soccer club Hamburger Sportverein.

The performance of our funds also proved highly encouraging. Practically 

70% of all funds beat their underlying benchmark; in some cases, the increases 

easily exceeded the latter. 

The refocusing of the product range, greater efficiency in terms of both 

administration and settlement as well as tight cost management all led to a 

marked rise in profitability. 

Innovative products for institutional clients 

At end-2003, the institutional segment of COMINVEST was managing an overall 

volume of 725.2bn in 336 Spezialfonds (non-publicly-offered funds), 25 portfolios 

under free portfolio management and 15 retail funds not offered for public 

sale. In addition, 72.2bn was invested in 33 advisory mandates. 

Last June, COMINVEST Institutional launched the first German mutual fund 

for institutional investors which invests almost exclusively in securitized issues 

(asset-backed securities). This innovative product generated inflows of an overall 

781.6m. 

Custody service and custody outsourcing 

The European Bank for Fund Services (ebase), a wholly-owned subsidiary of 

CAM Holding GmbH, is a full-service platform for custody services and custody 

outsourcing. In its second year of existence, it passed further important milestones 

in its business development. In the field of capital investment company 

outsourcing, it concluded a cooperation agreement with Siemens KAG and 

Credit Suisse Asset Management GmbH. The custody accounts of these companies 

were combined with those of ebase and successfully integrated into the 

ebase IT system. With its IT expertise and professional project management, 

ebase has staked out a claim for itself in the fiercely contested market for service 

platforms. In the second product segment, multi-fund custody accounts, it has 

reached agreement with its cooperation partners to make a range of 3,500 funds 

available. At end-2003, ebase was managing altogether 910,047 accounts with 

76.2bn of assets under control. 

Subsidiaries in Europe 

Our subsidiary in the United Kingdom, Jupiter International Group plc, benefited 

from the positive trend for the UK stock market. Assets under management grew 

by 22%. Hedge-fund management was especially successful with its flagship 

Jupiter Hyde Park. The funds under management expanded from US$190m at 

the start of 2003 to US$614m. At year-end, Jupiter was managing roughly 

715bn. This year as well, Jupiter is pursuing a profitable growth strategy so that 

its funds can outperform comparable funds over the long term. Activities in the 

current year are focused on improving the market position of its retail funds in 

the United Kingdom. In addition, hedge-fund business is to be expanded and 

growth potential tapped in Continental Europe by making use of synergies with 

COMINVEST. 

Our French subsidiary, Caisse Centrale de Réescompte (CCR), registered an 

encouraging rise in its 2003 results of 22% to 723.3m. At end-2003, CCR was 

managing assets of 712.8bn, an increase of 3.3% on the previous year. The management 

of equities based on the “value” approach, introduced by CCR in the 

French market in 1998, displayed an impressive and extraordinary development, 



generating a plus of 122%. Thanks to this success, our subsidiary is benefiting 

from a further diversification of its asset-management activities. At the same 

time, it is maintaining its traditionally strong position as a leading provider of 

money-market products. 

ADIG-Investment Luxemburg S.A. (ALSA) was administering funds of 

711.8bn in its core business – fund services for Group and non-Group associates 

– at end-2003. In the shareholder services area, it was looking after 24,978 

investment accounts with an overall volume of 71.0bn at year-end, 7419.8m of 

which was attributable to institutional investors. This represents a year-on-year 

increase of 80%. In the current financial year, it is planned to focus on implementing 

the interest-taxation guidelines and to concentrate further on core competencies. 

The Irish subsidiary, CICM Fund Management in Dublin, managed 73.2bn in 

its core business of fund administration. In 2003, six new funds were launched 

for Commerzbank and relations with other business lines, such as Private Banking, 

were further strengthened. Thanks to the stepped-up expansion of information 

technology, CICM established a straight-through processing (STP) link with 

all the custodian banks last June. Up to now, this has been realized by only a 

handful of institutions. 

The Spanish AFINA company maintained its growth strategy in 2003, raising 

its assets under management by 50%. In order to increase market coverage and 

to tap the attractive Catalonian market, an offshoot was established in 

Barcelona. 

Successful in Asia 

As Asian markets rebounded strongly and sales activities became more intensive, 

our asset-management companies in Asia were able to expand their customer 

base and their assets under management substantially. To an increasing 

extent, regional products were developed in order to serve the growing intraregional 

investment flows. Profitability was boosted sharply again in 2003.

Group companies and equity participations 

in the Retail Banking and Asset Management division 

Retail Banking department 

comdirect bank AG 

Quickborn 58.7% 2) 

Private Banking department 

Commerzbank Europe 

(Ireland) 

Dublin 44.0% 1) 

Commerzbank 

(Switzerland) Ltd 

Zurich 100.0% 2) 

Asset Management department 

COMINVEST 

Asset Management GmbH 

Frankfurt am Main 100.0% 2) 

Caisse Centrale de 

Réescompte, S.A. 

Paris 99.6% 

Commerzbank Asset 

Management Asia Ltd. 

Singapore 100.0% 2) 

Commerz Service Gesellschaft 

für Kundenbetreuung mbH 

Quickborn 100.0% 


International S.A. 

Luxembourg 100.0% 2) 

European Bank for Fund 

Services GmbH (ebase) 

Haar near Munich 100.0% 2) 

Capital Investment Trust 

Corporation 

Taipei 24.3% 1) 

Commerz International Capital 

Management (Japan) Ltd. 

Tokyo 100.0% 2) 

1) The Parent Bank holds some of the interest indirectly. 

2) The Parent Bank holds the interest indirectly. 

RETAIL BANKING AND ASSET MANAGEMENT 27 

COMMERZ PARTNER Beratungsgesellschaft 

für Vorsorge- und 

Finanzprodukte mbH 

Frankfurt am Main 50.0% 

Commerzbank International 

Trust (Singapore) Ltd. 

Singapore 100.0% 1) 

ADIG-Investment 


Luxembourg 100.0% 2) 

CICM Fund Management Ltd. 

Dublin 100.0% 2) 

Jupiter International 

Group plc 

London 100.0% 2) 



Singapore 100.0% 

AFINA Bufete de Socios 

Financieros, S.A. 

Madrid 48.7% 

Commerz Advisory 

Management Co. Ltd. 

Taipei 100.0% 2) 

KEB Commerz Investment 

Trust Management Co. Ltd. 

Seoul 45.0%

‡ With whom do german companies do the 

best deals abroad? ‡ with commerzbank ‡ 

SEDUS stoll ag, one of germany’s largest producers of office fur- 

niture, draws upon our experience. Just as other companies have 

for decades. That’s why we’re involved in 16% of germany’s overall 

external trade today. When are you coming to us? 

‡ ideas ahead ‡


Corporate Banking 

department 

2003 

Equity tied-up (7 m) 5,154 





corporate and investment banking 

The Corporate and Investment Banking division is responsible for business relationships 

with companies and institutions as well as the product and trading 

areas geared to these groups of customers. 

Strategically, the systematic development of business with the successful 

German Mittelstand continues to be of outstanding significance for us. We 

intend to become Germany’s best nationwide bank for Mittelstand companies. 

At the same time, we want to be the partner of choice for our larger corporates 

and multinationals, able to provide them with the right solutions. 

Corporate Banking department 

In view of the flat economic performance in Germany for the third year in succession 

and a further rise in company insolvencies, the overall conditions for 

corporate business remained difficult in 2003. They were felt above all in persistently 

weak demand for financing, primarily reflected at the Bank in a decline 

in our lending to larger corporates and multinationals. While provisioning for 

problem credits is still at a high level, we were able to reduce the valuation 

allowances in our lending by altogether more than a fifth, not least thanks to 

the acknowledged efficiency and state-of-the-art character of our systems for 

managing risk. 

We attach great priority to reflecting risk in our pricing, which in any case will 

become obligatory at the latest with the introduction of Basel II. Margins in corporate 

business remain narrow and do not adequately reflect the risk. Alongside 

these efforts, we have stepped up our cross-selling in order to sell more of our 

other banking products and services and we are intensifying the dialogue with 

our customers. 

Lending offensive for Mittelstand 

In order to underscore our Mittelstand orientation and to counter the frequently 

and indiscriminately raised accusation that the private-sector banks are no 

longer lending to Mittelstand firms, we launched a lending offensive last spring 

especially designed for this group of customers. In a first step, we made available 

an extra one billion euros in funds. Shortly afterwards, we were able to 

arrange a global loan of 7500m with Kreditanstalt für Wiederaufbau for financing 

the investments of smaller businesses. In addition, we made available – for 

the first time at individual state level – a global loan of 7250m with L-Bank 

Baden-Württemberg especially for companies in this state. A third general loan 

facility of 7100m for firms in Bavaria was arranged with LFA Förderbank Bayern. 

We pass on the funding advantage realized through these general loan facilities 

to our Mittelstand borrowers. All told, we provided almost 72bn from these programmes 

alone for the new business of smaller firms, thereby holding our lending 

to Mittelstand companies steady against the general trend – in marked contrast 

to popular talk of a credit squeeze.

In order to improve the financial standing of smaller businesses and to create 

greater transparency, we have strengthened our rating-based advisory service. 

There has been remarkably strong demand for our “rating:coach” product. 

In the meantime, we have found over 200 customers for this very individual 

advisory service. 

Dynamic expansion of “public sector” 

In addition to traditional corporate customers, we are increasingly serving institutions 

of the public sector as an independent target group of Corporate Banking. 

Above all, these are the federal, state and local authorities, and especially 

“Konzern Kommune” with its often numerous municipal companies and financial 

peculiarities. 

As a rule, the main emphasis is on communal loan business, which registered 

an encouraging development. In 2003, for instance, Commerzbank was 

once again the European market leader in selling credits under the EIB global 

loans programme. But we were also successful in finding financing solutions 

for social-insurance institutions, local utilities and waste-disposal companies as 

well as for healthcare institutions. There was also lively demand for derivative 

instruments for use in interest-rate management. Institutions availed themselves 

to a very great extent of the persistently low level of interest rates both to 

finance investments and to reduce their interest burdens. 

Advising municipal enterprises, such as public utilities, continues to be particularly 

important. On account of the trend towards more competition and 

greater deregulation, organization and rating are the main topics here. In the 

area of municipal investment, we have created a special mixed fund consisting 

of equities and bonds, “KommunalCorent”, as a portfolio insurance instrument 

and have been quite successful with it. 

Improved functions for corporate-customer portals 

We added several functions to our two Commerzbank corporate-customer 

portals last year, thereby making electronic access to the Bank even easier. The 

Mittelstand portal, for example, now has a forward money-market function. In 

the meantime, this “companydirect” portal is regularly selected and used by 

more than 22,000 of our corporate clients. This represents virtually half of the 

relevant target group. 

Additional modules and functions have also been integrated into “companyworld”, 

the internet portal for larger Mittelstand firms. These make documentary 

foreign commercial business and also bulk payments via internet simpler and 

international payments easier. Our goal continues to be to introduce new applications, 

creating greater financial scope for corporate customers through these 

portals and providing them with a better overview of their day-to-day transactions. 

New fund products for financial investments 

In order to tap new attractive financial investment opportunities for Mittelstand 

customers and smaller institutional investors, Commerzbank has reached an 

agreement for close cooperation with the American SEI Investments Company. 

First and foremost, our customers, who are able to choose between two investment 

funds applying the manager-of-managers approach, will benefit from the 

CORPORATE AND INVESTMENT BANKING 31


independent selection and control of SEI, one of the world’s leading companies 

in the area of investment consultants. This will give them access to the best 

managers in all the relevant markets and investment styles. Through the cooperation 

with SEI Investments, our investors will achieve far better performance for 

their company funds, especially over the medium to long term. 

Commerzbank is the first bank in Germany to conclude such an exclusive 

cooperation agreement with a broadly-based manager-of-managers platform. 

Mezzanine to overcome weak capital base 

With our new product initiative “Mezzanine for the Mittelstand”, we are seeking 

to tackle a core problem of Germany’s smaller businesses: their overly high 

debt/equity ratios. By offering mezzanine financing, we are expressing our confidence 

in their future. They can then receive the liable funds to enable them to 

realize their investment plans without having to restrict their decision-making 

scope. The mezzanine funds are made available by our subsidiary Commerz 

Beteiligungsgesellschaft and have an average lifetime of five to seven years. 

Our goal: more Mittelstand customers 

In the current business year as well, Corporate Banking is set to steer an expansion 

course. In the Mittelstand segment in particular, we want to gain new customers 

and raise the proportion of such companies which have a Commerzbank 

account from its present level of 39%. An important role in this connection is 

played by our four financial engineering centres set up in 2002, providing onthe-spot 

support for our corporate relationship managers in the form of quality 

structured and corporate-finance products. We will do all that is in our power to 

complement our attractive product range in the areas of interest-rate, currency 

and liquidity-risk management, transaction and cash management, as well as 

international trade and export financing by adding innovative solutions 

designed for Mittelstand firms. At the same time, our Mittelstand offensive is 

intended to help make our corporate business as a whole more profitable. 

“Move to the top” 

At the start of 2004, our Bank’s entire Corporate Banking repositioned itself. We 

gave this important corporate project the name “Move to the top”. The main 

emphasis in this repositioning is to make a clear distinction in the support which 

we provide for our key target groups – on the one hand, for smaller businesses 

at our 20 main branches with more than 150 sales locations; on the other, for the 

larger corporates centres, specialized in dealing with our larger corporate customers 

in the major business locations of Hamburg, Düsseldorf, Frankfurt, 

Stuttgart and Munich. Retaining our successful existing practice, we will continue 

to look after roughly 100 selected multinationals from our head office, applying 

a global relationship management approach. With this systematic target-group 

orientation, we will further strengthen our excellent competitive position. 

Experts at finding solutions for such management problems as interest and 

currency risk or complex solutions in the area of cash and transaction management 

are available to support these customer segments. They are assigned to 

the newly formed product areas Interest, Currency & Liquidity Management 

(ICLM) and Trade Finance & Transaction Services (TFTS), which have a single 

management. Maintaining the previous successful arrangement, a qualified

elationship manager will coordinate the overall business relationship with the 

client. We believe that this new orientation will above all generate sustained 

growth in the Mittelstand segment and more intensive commitments in the 

larger corporates area. 

Financial Institutions department 

On behalf of the Group, the Financial Institutions department looks after relations 

with German and foreign banks and financial services providers as well as 

central banks and countries. Applying a global approach, it also complements 

our network of operative outlets. In the 2003 financial year as well, it made a 

stable contribution to results. 

Our strength abroad is based on a closely-knit network of 26 representative 

offices as well as delegates of the Bank in all the leading economic regions. In 

addition, the relationship managers at head office possess detailed knowledge 

of the cultural, legal and economic conditions in the regions for which they are 

responsible. 

In foreign commercial business, contacts with over 6,000 banks document 

Commerzbank’s position as a leading external-trade bank. We handle the financial 

side for 16% of Germany’s external trade – a large market share which has 

been growing for years and which we easily maintained in 2003; for exports 

alone, the share is even as much as 17%. We are especially well-positioned 

in the emerging markets, for which this department serves as a centre of competence. 

Comprehensive range of services 

We provide businesses active in external trade with a comprehensive and highquality 

service. Here, Financial Institutions forms the bridge between German 

corporate customers and foreign banks. Our main products and services are: 

Advice on delivery transactions and planned investments 

Handling payments via direct accounts in more than 70 currencies 

Provision of foreign guarantees, taking into consideration local regulations 

Cover against claims arising from letters of credit or guarantees 

Forward exchange cover even for exotic currencies 

External-trade financing, from forfaiting to complex structured products, as 

well as 

Direct on-the-spot support. 

In 2003, we were able to confirm our important position as a European transaction 

bank and participant in the euro-clearing system. 

Good opportunities in Central and Eastern Europe 

Despite geographical concentration on our European home market, Commerzbank 

still has a direct presence in 43 countries. 

In Central and Eastern Europe, we have even increased our presence in some 

places. At the end of the year, for example, our new branch in Bratislava began 

operations, which had developed from the Bank’s former representative office 



Securities department 

2003 






in Slovakia. In the current year, a further representative office will follow in the 

Serbian capital, Belgrade. Our network in the Central and Eastern European 

region, where we are one of the largest foreign banks, is complemented by 

minority stakes in several procredit banks, the former microfinance banks. 

By far our most important involvement in the region is our interest in BRE 

Bank in Poland, which having achieved a turnaround last year is now back on an 

expansion course. With its market share of a good 6.5%, it is one of the country’s 

leading banks. After receiving the approval of the authorities to raise our existing 

50% interest in BRE Bank to a maximum of 75%, we acquired further shares 

through two public tender bids. In the meantime, our stake amounts to more 

than 72%. This puts us in a position to play a major role in a consolidation of the 

Polish banking market. 

US branches successful 

Last year, the Commerzbank branches and subsidiaries operating in Western 

Europe had to contend with a persistently unfavourable market environment. We 

mainly concentrated on improving the networking of our units and on strengthening 

our sales teams through specialists for complex financing solutions. 

Larger corporates and multinationals in particular benefited as a result. 

In North America, we maintain four branches; last year, they remained on a 

successful course, once again turning in exceptionally good results. Their pretax 

return on equity reached 24%. Above all, asset/liability management and secondary-market 

activities registered above-average performance again. The cost 

base was further reduced, by a tenth. Due to the strong economic upswing, we 

see good opportunities for our Northern American outlets this year as well. 


The strongest improvement in the results of our operative business lines last 

year was registered by the Securities department, which has included foreignexchange 

business since mid-2002. Thanks to substantial reductions in costs, 

accompanied by a recovery in trading revenues, and with a gradually more positive 

outlook in the markets, Securities returned to profitability. 

Central to business strategy in 2003 was an expansion in services for corporate 

clients in Germany, but also throughout Europe as a whole and the United 

States. For the first time, the range extended from capital raising and products 

for hedging and asset enhancement to advising companies facing the need to 

reorganize their balance sheets. 

Synergies from integration of bond and FX businesses 

The fixed-income area benefited last year not only from the persistent buoyancy 

of new issues and trading activity in many markets, but also from the integration 

of foreign-exchange and interest-rate business. Both of these will now be provided 

from a single platform and can draw upon the synergies to their mutual 

benefit, given the ever greater influence that exchange rates have on interest 

rates.

In options business as well, the advantages of this integration are becoming 

evident, with a positive trend in both client business and proprietary trading. The 

launch of long-dated/exotic FX options will add further to revenues this year. 

A new electronic trading platform, developed last year, will give our private and 

corporate clients direct access to the global FX market. 

In the run-up to EU enlargement, we have integrated trading in Central and 

Eastern European bonds into our major European centres in London and Frankfurt, 

enabling us to provide the complete service of an international investment 

bank for all customers in the accession countries as well. 

Turnaround in equity capital markets 

Thanks to the strong recovery in equity markets and increased fund-raising 

activity on the part of many companies, we considerably expanded our equity 

capital markets business. Among other things, Commerzbank acted as adviser to 

France Télécom in their 715bn capital increase, the largest-ever rights issue. The 

deal was named Equity Issue of the Year by International Financing Review. The 

improved performance of ECM was achieved despite a disappointing IPO market 

in Germany. 

The development of a European-based M&A business remains a key part 

of the strategy to provide our clientele with a complete range of investmentbanking 

products and services. In a subdued market environment for M&A, we 

advised clients in ten completed deals last year. 

Combining the syndicated loan and debt capital markets groups also had a 

positive impact on our business opportunities. We served as joint lead arranger 

for a two-year credit of 713bn for DaimlerChrysler. In addition, we were the lead 

manager of syndicated loan deals for such prominent companies as Volkswagen, 

Degussa and Linde. 

In the bond market, we played a major role in a floating-rate issue, once 

again for DaimlerChrysler. Other important issues in which we were involved 

were launched by the Republic of Turkey and the European aerospace company, 

EADS. 

In asset-backed securities, we built further upon our strong market position 

and franchise. Among other things, we were the sole bookrunner for both of 

the two largest European securitization deals, for Aareal Bank and Eurohypo. 

We believe that the true sale initiative, which Commerzbank has worked to 

establish, will generate sustained growth for the securitization market over the 

next few years. 

Success with hedge fund certificates 

Our derivatives group benefited from both the recovery in equity markets and 

our efficient distribution channels for institutional and private investors in Germany. 

The star product proved to be our hedge fund of fund index-linked certificates, 

offered under the name of Comas. The new Comas unlimited certificate 

in particular achieved excellent performance combined with low volatility. 

Commerzbank is now regarded as a major player in the fund-linked derivatives 

markets. 



Independent Commerzbank research 

Research activities are increasingly focused on a core German expertise across 

all asset classes, geared to the needs of both institutional and corporate customers. 

In different independent surveys, we performed exceptionally well, 

underlining our approach of offering absolutely independent research that 

meets high quality standards. 

Real Estate department 

Our Real Estate department has remained unchanged, comprising Commerz 

Leasing und Immobilien AG (CLI), Düsseldorf, and Commerz Grundbesitz Gesellschaft 

GmbH (CGG), Wiesbaden. Once again, it achieved an encouraging profit 

contribution of about 7100m. 

CLI – a leading German leasing company 

Despite a difficult overall economic and tax framework, our subsidiary CLI was 

able to strengthen its position as one of the leading and most profitable German 

leasing companies. The group consists of CommerzLeasing und Immobilien AG 

together with 13 subsidiaries and four equity participations, covering the entire 

spectrum of leasing and real-estate business. Last year, it generated its largest 

volume of new business to date, at 72.5bn, with expansion fuelled by activities 

in Germany. The leasing of moveable goods grew by a particularly dynamic 22%. 

All in all, the CLI group asserted its market position in the real-estate area, 

which includes – apart from the leasing of property and large moveable goods – 

structural financings and funds, and further expanded it in the leasing of moveable 

goods. At end-2003, the overall portfolio of contracts amounted to 723bn. 

The year’s most important transactions were: 

In real-estate/structured investments, a leasing contract for a fund-based 

plan of over 7400m for the new head office of a major company, a major 

municipal investment with a volume of more than 7300m and a 7100m supplier 

financing for investment in machinery and equipment by an automobile 

components supplier. 

In the fund area, the inclusion of five ships of identical construction in a shipping 

fleet fund with a volume of US$167m and a stadium fund of 7163m. In 

addition, a project development plan was implemented in Düsseldorf with 

roughly 22,000 square metres of office space and included in a closed-end 

property fund. As a result, the overall volume of investors’ capital held in 

funds rose to 73.4bn, representing 82,000 individual investments. 

In the leasing of moveable goods, the acquisition of Hansa Automobil 

Leasing GmbH and also the integration of ComSystems GmbH, a company 

for the leasing of hardware and software, sold by DaimlerChrysler in 2002.

CGI/HAUS-INVEST remains on successful course 

Once again, the Commerz Grundbesitz group achieved above-average success 

with its sales. Under the roof of Commerz Grundbesitz Gesellschaft, it consists 

of Commerz Grundbesitz-Investmentgesellschaft mbH (CGI), which manages the 

open-ended property fund HAUS-INVEST europa, and Commerz Grundbesitz- 

Spezialfonds-Gesellschaft mbH (CGS) for business related to non-publiclyoffered 

property funds. 

Last year, a net 71.75bn flowed into HAUS-INVEST europa – roughly 13% of 

the net inflows for all of Germany’s open-ended property funds. The fund’s 

assets rose to 711.9bn. As a result, it remains the market leader, at 14%, and also 

the largest German investment fund. 

The large net inflows were immediately invested in attractive real estate. 

At year-end, the overall portfolio comprised 152 properties in 10 countries and 

60 cities. The non-German share of the assets amounted to more than 75%. 

Commerz Grundbesitz-Spezialfonds-Gesellschaft can also look back on a successful 

year. It has now launched four property funds for institutional investors 

and acquired altogether 28 properties in nine European countries, for which it 

invested an amount of roughly 7600m. 

Group companies and equity participations 

in the Corporate and Investment Banking division 

Corporate Banking department 

BRE Bank SA 

Warsaw 72.2% 

Commerz (East Asia) Ltd. 

Hong Kong 100.0% 


CBG Commerz Beteiligungsgesellschaft 

Holding mbH 

Bad Homburg v.d.H. 100.0% 

Real Estate department 

Commerz Grundbesitzgesellschaft 

mbH 

Wiesbaden 100.0% 

Commerzbank (Budapest) Rt. 

Budapest 100.0% 

P.T. Bank Finconesia 

Jakarta 51.0% 

Commerzbank Capital Markets 

Corporation 

New York 100.0% 

CommerzLeasing und 

Immobilien AG 

Düsseldorf 100.0% 

1) The Parent Bank holds some of the interest indirectly. 

2) The Parent Bank holds the interest indirectly. 

CORPORATE AND INVESTMENT BANKING 37 

Commerzbank (Eurasija) SAO 

Moscow 100.0% 

Commerz Futures, LLC 

Chicago 100.0% 1) 

Commerzbank (Nederland) N.V. 

Amsterdam 100.0% 2) 

Commerz Securities 

(Japan) Company Ltd. 

Hong Kong/Tokyo 100.0%

‡ What if you have more important things to 

do than to go to your bank? ‡ then we simply 

come to you ‡ you can settle a lot of things by phone or 

online, but not everything. We prefer to discuss with you personally 

what is crucial for you. anywhere you wish. 

‡ ideas ahead ‡


Staff and welfare report 

In view of the persistently unfavourable economic situation, we launched a 

further cost-cutting offensive with the aim of reducing operating expenses by 

almost 7700m to altogether 74.5bn by end-2004. Apart from numerous savings 

in non-personnel costs as well as various painful cuts in pay and extra benefits, 

this also called for additional staff reductions of 3,100 full-time personnel – this 

time mainly at head office and in our foreign outlets. 

In 2003, we realized all our targets. The Commerzbank Group’s regular workforce 

shrank from 34,336 in June 2001 to 27,630 full-time staff at end-2003. This 

means that over 6,700 jobs were shed, which we have achieved up to now without 

dismissals. In 2004, just under 700 jobs have to go, which, as things stand 

today, we will be able to realize according to plan. 

Company pension 

A further measure adopted by the Board of Managing Directors to reduce personnel 

costs was the cancellation of the company old-age provision schemes 

–the so-called bank pension – as of December 31, 2004. The cancellation, which 

was a hard decision for the management to take, had become very necessary for 

economic reasons. It related exclusively to the Bank’s own pension scheme. 

Employees’ benefits stemming from Bankenversicherungsverein (BVV), the 

banking industry scheme representing the second and much larger pillar of 

Commerzbank’s old-age provision, was not affected. 

Moreover, by the end of January 2004, in response to calls by the central staff 

council, the Bank declared its readiness to negotiate on a possible new system 

for company pensions, on condition that a new system of benefits would eliminate 

the risks attached to previous arrangements. 

The former systems, which were based on the final salary, entailed substantial 

and also incalculable risks that would have become economically intolerable 

and unjustifiable for the Bank. Above all, changing external factors, such as 

lower state pension payments and tax changes, are leading to ever greater 

financial commitments on the part of the Bank. Given the difficult economic setting 

in which Commerzbank is operating and in view of the medium to long-term 

perspectives, the Bank has to be able to calculate the cost of the company pension 

scheme better. This was not the case under the existing arrangements. 

In mid-February, the Board of Managing Directors and the central staff council 

reached agreement on the framework for a new system of company provision 

for old age. The three existing internal agreements on the bank pension are to 

be replaced by a uniform defined-contribution internal agreement. Negotiation 

of the details was to begin at end-February and is to be concluded by end-June 

2004.

Data on Commerzbank’s personnel* ) 

Looking ahead 

In order to streamline our administration even further, we have subjected work 

procedures in personnel support to critical examination. The aim of the project 

was to maintain the quality of personnel work or even improve it in times of 

cost-cutting. The core features of the restructuring which has been initiated are: 

less administration through more efficient structures and procedures, a higher 

degree of automation through the use of modern technology and more intensive 

advisory functions. 

The new electronic portal “Personal Online” gives employees, managers and 

human resources staff direct access to all the necessary personnel information, 

services and applications. Many activities – such as entering periods of leave, 

making an adjustment to flexitime or notifying a change of address – can now 

be handled swiftly and smoothly online. 

In a new information centre, members of staff and managers receive extensive 

and professional advice on all personnel-related topics which are not covered 

by “Personal Online”. 

In addition, specialists at ten regional service units advise managers of our 

Bank in particular on complex issues arising in various ways from the responsibility 

borne for managing personnel. 

STAFF AND WELFARE REPORT 41 

2003 2002 Change in % 

Total staff Group 1) 32,377 36,566 –11.5 

Permanent staff Group 2) 29,580 33,224 –11.0 

Total staff Parent Bank 1) 25,260 28,343 –10.9 

including: based abroad 2,303 2,604 –11.6 

including: trainees 1,331 1,568 –15.1 

Permanent staff Parent Bank 22,966 25,303 –9.2 

Years of service 

more than 10 56.2% 53.2% 

more than 20 22.3% 21.0% 

Total pensioners and surviving dependents 11,587 11,267 2.8 

including: those retiring during the year 475 446 6.5 

those entering early retirement 140 291 –51.9 

Older staff on part-time scheme 338 316 7.0 

*) Actual number employed; 1) including local staff in representative offices and cleaning and kitchen personnel, excluding staff on maternity 

leave and long-term sick; 2) employees, excluding trainees, junior executive staff, temporary staff, volunteers, cleaning and kitchen 

personnel, staff on maternity leave and long-term sick.


Internal suggestions scheme 

Our internal suggestions scheme, COMIDEE, which was radically overhauled 

five years ago, continues to meet with very high acceptance. In the years ahead 

as well, we will ensure that it remains a dynamic process. There is hardly 

another forum which employees can use to express their ideas and criticism so 

directly by having an impact on the company with their own ideas and receiving 

an attractive award in return. 

Skill management – coming to grips with personal development 

Employees frequently express the wish to form a clear picture of the opportunities 

for their personal development and deployment within the Bank. By introducing 

our skill-management system, we are able to fulfil this wish. Staff can 

now make their personal qualifications, experience, abilities and interests within 

the company transparent electronically and thus actively shape their professional 

development. At the same time, skill management provides managers 

and human resources personnel with transparency as regards the potential of 

the staff in the areas for which they are responsible. With the aid of the system, 

managers can analyse the need for staff in their department to gain further 

qualifications, seek suitable candidates to fill vacancies in their department and 

optimally support their staff in achieving their development goals. Participation 

in skill management is voluntary and is dependent on the active involvement of 

employees and managers. Following the successful pilot phase in our management 

circle B and on the retail side of our Mannheim main branch, skill management 

will be successively introduced nationwide starting this year. 

Developing managerial potential – more important than ever 

Especially in economically difficult times, developing managerial potential is of 

key importance. The main emphasis is on the management circles which we 

have established to develop management personnel for the most part from 

within the Bank and to prepare them for their next post. All of Commerzbank’s 

management circles begin with a selection procedure, followed by various qualification 

modules. 

Which management circle for which function? 

In management circle C, 188 staff are currently gaining the qualifications for 

their future functions as either group leaders or branch managers. At present, 

management circle B has 123 future sectional heads or regional branch managers. 

The 26 members of management circle A are preparing themselves to 

manage a main branch or head-office department. The management circles 

enable us to secure a constantly high level of managerial skills at Commerzbank.

Training younger staff 

In the difficult economic environment of the past few years, we have maintained 

our training of younger personnel at a level well in excess of our own needs. In 

addition to commercial training, we offer training as bank information scientists, 

courses at vocational academies, qualification for younger staff through 

Commerzbank study circles, tertiary-level studies in banking and further training 

via our own internal junior executive programmes and courses of study at 

Bankakademie. 

Altogether 419 young people started their training at Commerzbank in 2003. 

Most of them – 313 participants – are future qualified bank employees (Bankkaufleute), 

while 72 are students at the vocational academy. 

A major feature last year was the systematic implementation of our new 

approach to the training of qualified bank employees. The main goal of the new 

approach is to encourage people to act with a sales orientation and to learn of 

their own accord. We want to put our trainees in a position to seize the initiative, 

to actively approach customers, systematically analyse what is needed, develop 

satisfactory solutions, present them convincingly, thereby achieving customer 

satisfaction. With the aid of detailed correspondence lessons and new media, it 

is possible to acquire the necessary theoretical foundations and then train the 

application of the knowledge acquired in practical workshops. The stronger link 

between learning at college, on the one hand, and on-the-job learning at the 

Bank, on the other, enables our future bank employees to work even more successfully 

for the benefit of our customers and the Bank. 

We thank our staff 

Successful personnel work can only be realized in constructive cooperation with 

the management and the employee representatives. That is why we want to take 

this opportunity to thank the staff councils, the spokesmen of the Bank’s senior 

staff, and the representatives of both the physically disabled and the younger 

staff for the responsible nature of their cooperation. 

Naturally, our special thanks go to all those staff who, despite the difficult 

overall conditions, have put in intensive efforts to help us achieve a return to 

profitability in our operating business. 

STAFF AND WELFARE REPORT 43

‡ What happens if somewhere in the world a 

new trend appears? ‡ your phone rings ‡ you 

shouldn’t chase after opportunities, but rather meet them head-on. 

But who lets you know where things are happening and what’s 

promising? We do, for example. When we find something suitable, 

we tell you immediately. 

‡ ideas ahead ‡


Data and facts on the 

Commerzbank share 

Bearer shares 803 200 

Reuters CBKG.DE 

Bloomberg CBK GR 

ISIN DE0008032004 

Performance of the 

Commerzbank share 2003 

Daily figures, 

30.12.2002=100 

Our share, strategy and outlook 

After the year’s crises, the fear of terrorism, but above all the war in Iraq and the 

long period of sluggish economic activity, the quick recovery in the equity markets 

and the return to normal undoubtedly came as a surprise. German financials 

in particular registered marked price gains in 2003, advancing at double- or 

three-digit rates. 

With a plus of 108.7%, the Commerzbank share even claimed first place in the 

DAX index. The performance not only of its national competitors but also of 

European financials improved to a far lesser extent. Over the twelve-month 

period, the DowJones EuroStoxx Banks index climbed by roughly 35%. In a yearon-year 

comparison, Commerzbank’s market value surged from 74.0bn to 

79.3bn due to its price performance and the increase of about 10% in the number 

of shares. 

240 

220 

200 

180 

160 

140 

120 

100 

80 

60 

Commerzbank share DJ Euro Stoxx Banks CDAX (Banks) 

Group restructuring makes progress – capital increase without rights issue 

The extensive revaluation of our entire securities and investments portfolio 

came as a positive surprise for the market. We see the following advantages: 

Permanent reduction of goodwill amortization; 

Disposals from investments portfolio have been made easier; 

Lower funding costs; 

Sustained profitability and ability to pay dividend have been achieved, which 

will also benefit shareholders in the form of a higher share price and dividend 

payments; 

Strengthening of position vis-à-vis competitors and in current consolidation 

process. 

This revaluation measure, whose rigour and scale were unique up to now in 

the European banking sector, went hand in hand with the issue of new shares. 

The capital increase without subscription rights for shareholders was resolved in 

order to dampen the effects of the measure on the Bank’s regulatory capital. 

Interest in subscribing to the roughly 53.3 million new shares was so great that 

the transaction was concluded within only a few hours. The book had been oversubscribed 

more than four times. The new shares were allocated at a price of 

714.25. This transaction lifted the number of issued shares to almost 598 million.

Change in shareholder structure 

Through the capital increase, several changes have occurred in our shareholder 

structure. The interest of Munich Re, for instance, was reduced from 10.4% to 

9.5%, while that of WCM initially fell from 5.5% to 4.9%; the company has since 

disposed of at least a further 4% of our shares. 

As only an interest in a company that exceeds 5% is deemed a permanent 

investment, the free float in Commerzbank shares rose to 81.7%. The free float 

is crucial for a company’s weighting in various indices. For this reason, the 

Commerzbank share now accounts for 1.792% of the DAX index. 

In January 2004, we commissioned a fresh survey of our shareholder structure. 

The findings are now available and present an interesting picture, not least 

by comparison with the last detailed surveys in 1994 and 1999. 

The most obvious shift is that over the past ten years the percentage of 

Commerzbank’s shares held by institutional investors has steadily increased, 

from 49% to 60%, and now to as much as 76%. This confirms that the disposals 

of blocks of shares and the November 2003 capital increase have landed for the 

most part in the custody accounts of institutional investors. 

Private investors hold over 24% of Commerzbank AG in 347,600 accounts, 

with 23% held in Germany. 29% is in the hands of German companies and institutional 

investors. At the start of 2004, therefore, 52% of Commerzbank shares 

were held by German investors, the largest domestic investor being Munich Re. 

Non-German banks and institutional investors account for 48% of Commerzbank’s 

shares. 32% is held in member states of the European Union, with Italy 

especially prominent at 12%. Above all, Assicurazioni Generali (9.1%), 

Mediobanca (1.4%) and Banca Intesa (1.9%) should be mentioned in this connection. 

Since the last survey five years ago, the position of non-German 

investors has increased by ten percentage points. At 8%, the United Kingdom 

occupies the next place, followed by Spain with 4%; here, Bank Santander 

Central Hispano has a 3.4% stake in Commerzbank. Swiss investors hold 6% of 

Commerzbank’s shares and US investors 4%. 

When share prices boomed in the second half of the nineties, the number of 

Commerzbank shareholders surged from 190,000 to 410,000. The more sober 

mood of the past few years has reduced the number of direct investors some- 

Abroad Germany 

1.0 Private investors 

9.1 Generali 

3.4 SCH 

1.4 Mediobanca 

1.9 Banca Intesa 

31.2 Institutional investors 

OUR SHARE, STRATEGY AND OUTLOOK 47 

23.3 Private investors 

9.5 Munich Re 

19.2 Institutional 

investors 

Commerzbank’s 

360,000 shareholders 

in per cent 

share of capital held 

(as of start of March 2004)


Turnover in 

Commerzbank shares 

2003 

in 7 bn, quarterly figures 

5 

4 

3 

2 

1 

0 

Daily turnover 

High 35.32m units 

Low 0.81m units 

Average 3.70m units 

what. However, with 360,000 investors Commerzbank remains one of Germany’s 

major public companies. Its employees and pensioners represent a significant 

group, to which the Bank has regularly issued special employee shares for practically 

three decades. In the meantime, they own just over 3% of the Bank. 

Stock-exchange listings of the Commerzbank share 

Germany Berlin, Bremen, Düsseldorf, Frankfurt, 

Hamburg, Hanover, Munich, Stuttgart, Xetra 

Europe London 

Switzerland 

Asia Tokyo 

North America Sponsored ADR 

(CRZBY) CUSIP: 202597308 

The year’s IR highlight: Investors’ Day 2003 

In 2003 as well, Commerzbank’s Investors’ Day was a convincing event: more 

than 90 analysts and fund managers took up the invitation to come to Collegium 

Glashütten in order to hear about the latest developments at the Bank and the 

progress made by the individual business lines. More people participated than 

in the previous year, reflecting the growing interest of the financial community 

in Commerzbank. 

Capital-market communication 

Apart from Investors’ Day, which has established itself as a fixed element of IR 

activity, we also – as in previous years – held a number of analysts’ meetings, 

conference calls and roadshows as well as group and individual discussions. In 

order to improve our service for analysts and investors, we further improved 

Commerzbank’s IR internet portal. 

Recently, mounting interest has been registered on the part of fixed-income 

analysts in Germany and elsewhere in information about Commerzbank. So far, 

the enquiries have primarily related to the equity capital side; in future, the 

Investor Relations team will include this group to a greater extent in its communication 

activities. 

Our outlook 

More positive overall economic conditions and stable or improving markets 

make us confident as regards the development of our net interest and commission 

income. We expect provisioning at Group level to recede further to below 

one billion euros. We had already achieved the cost targets we had set ourselves 

for 2004 by end-2003. As things stand today, we will be able to hold our workforce 

at its current level. In 2004, we intend to come close to our target of 8% for 

the after-tax return on equity, even though in our planning we do not exceed this 

level until 2005. For 2006, we plan a return on equity that is higher than the 

medium-term cost of capital of 10%. At the same time, we want to get our 

cost/income ratio down to 65% by then.

Commerzbank’s major shareholdings in the financial sector 

Assicurazioni Generali 

Trieste 1.1% 

Mediobanca 

Milan 1.7% 

1) held indirectly 

In February 2004, we agreed with SchmidtBank to take over its branch business. 

In concrete terms, we are acquiring 70 branches and 29 self-service centres 

in Bavaria, Thuringia and Saxony. Thanks to this transaction, our retail customer 

base will expand by 10% or so. In addition, there are roughly 4,000 corporate 

customers. We expect the newly acquired business activities to be profitable by 

2005. 

Our strategic goals are: 

Banca Intesa S.p.A. 

Milan 3.8% 

Santander Central Hispano 

Madrid 1.9% 

to be the efficient provider of financial services for demanding private customers 

in Germany; 

to become the number one bank for Germany’s successful Mittelstand and 

the creative relationship bank for larger corporates and institutions in Europe 

as well as for multinationals from all over the world; 

to achieve a close integration of corporate business and investment banking; 

to allocate equity to reflect business lines’ growth potential; 

and to reduce strategically unnecessary shareholdings. 

Commerzbank’s 2004/2005 financial calendar 

Korea Exchange Bank 

Seoul 14.8% 

Unibanco – União de 

Bancos Brasileiros S.A. 

São Paulo 5.1% 1) 

OUR SHARE, STRATEGY AND OUTLOOK 49 

May 12, 2004 Interim report as of March 31, 2004 

May 12, 2004 AGM, Jahrhunderthalle Frankfurt 

August 4, 2004 Interim report as of June 30, 2004 

September 22, 2004 Commerzbank Investors’ Day 

November 10, 2004 Interim report as of September 30, 2004 

February 2005 Annual results press conference 2005 

Early May 2005 Interim report as of March 31, 2005 

May 20, 2005 AGM, Jahrhunderthalle Frankfurt 

Early August 2005 Interim report as of June 30, 2005 

Early November 2005 Interim report as of September 30, 2005 

All the major Commerzbank corporate news items are also available from “Investor Relations” on our homepage: www.commerzbank.com.

‡ it’s quite normal to be available for cus- 

tomers at all hours ‡ we think so, at any 

rate ‡ you can always reach us. By using our self-service zones 

and our extensive online services, Giving retail and corporate 

customers all they need in the way of banking. 

‡ ideas ahead ‡


Risk report 

Contents 

I. Risk-oriented overall management of Commerzbank 53 

1) Risk-policy principles 53 

2) Risk categories 53 

3) Integration of risk and capital management 

into the Bank’s overall management 54 

II. Risk-management/risk-control organization 56 

1) Risk control 57 

2) Risk management: the operative credit function (back office) 58 

3) Risk management: operative risk-steering 

of market units (front office) 59 

4) Internal risk reporting 59 

5) Internal auditing 59 

6) Implementation of developments in supervision: Basel II and MaK 60 

III. Risk-control/risk-management process 61 

1) Monitoring and controlling credit risk 61 

Internal rating system 61 

Quantification of credit-portfolio risk 63 

Credit-approval powers 65 

Monitoring of credit risk for trading activities 65 

Development of risk and risk provisioning 66 

Country risk 67 

Sectoral and bulk risks 68 

Use of credit derivatives 68 

Securitization transactions 69 

Reporting for credit risk 69 

2) Monitoring and controlling market risk 71 

Value-at-risk approach 71 

Back-testing 72 

Stress testing and sensitivity analysis 73 

Interest-rate risk 73 

Procedure for setting and monitoring limits 74 

Reporting for market risk 74 

3) Monitoring and controlling equity holding risk 74 

4) Monitoring and controlling liquidity risk 75 

Liquidity risk 75 

Liquidity-risk measurement 76 

Market-liquidity risk 76 

5) Monitoring and controlling operational risk 76 

Operational risk management framework 76 

Operational risk methods 77 

Business contingency and continuity planning 77 

6) Monitoring and controlling business risk 78 

7) Monitoring and controlling legal risk 78 

8) Monitoring and controlling strategic risk 78 

9) Monitoring and controlling reputational risk 78 

IV. Summary and outlook 79

I. Risk-oriented overall management of Commerzbank 

1) Risk-policy principles 

Commerzbank regards the professional treatment of risks as an important core 

competency and an integral part of a value-oriented overall Bank management. 

Apart from the risk strategy formulated by the Bank’s Board of Managing 

Directors, the basis for monitoring and steering risk throughout the entire 

Commerzbank Group is a comprehensive risk manual, presenting the organizational 

guidelines, responsibilities and procedures of the Bank’s overall riskmanagement 

system. Both frameworks are regularly examined and adjusted to 

accommodate internal and external developments. This creates the basis for a 

uniform Group-wide standard in dealing with all the major types of risk. Responsibility 

for implementing the risk strategy is borne by the Chief Risk Officer 

(CRO), who is a member of the Board of Managing Directors. 

Commerzbank’s system for the early recognition and monitoring of risk is 

geared to identifying risks in good time and to taking measures to counteract 

such risks in the sense of a proactive management and control of risk. The methods 

applied to measure, steer and aggregate all types of risk are continually 

being refined and regularly adapted to Commerzbank-specific requirements and 

current market conditions. Comprehensive, objective reporting enables the 

Board of Managing Directors as well as shareholders and market participants 

regularly to assess the Bank’s risk situation. 

As an elementary feature of the steering of risk and earnings, the systematic 

portrayal of risk provides the basis for business activities at the Commerzbank 

Group to be appropriately backed with capital and through its integration into 

the management of economic capital, it helps bring about an optimal allocation 

of capital and a sustained increase in the Bank’s market value. 

2) Risk categories 

For the purpose of risk management, the following types of risk are distinguished 

at Commerzbank: 

Credit risk is the risk of losses or lost profits due to unexpected defaults or 

unexpected deterioration in the creditworthiness of counterparties. In addition 

to this, credit risk covers above all issuer risk, counterparty risk and country risk. 

The general market risk represents the potential loss of a portfolio due to 

changes in share prices, exchange rates, precious-metal/commodity prices or 

interest rates in the market as a whole and their volatilities. The specific market 

risk (spread risk) covers the risk of loss due to changes in price of individual 

interest-rate and equity-based financial instruments relative to changes in the 

relevant market indices – which are reflected by the general market risk. 

For risk-management purposes, the risks arising from equity holdings of 

Commerzbank are also subsumed under market risk. They result from changes 

in the valuation of listed and non-listed equity holdings, which may be due to 

issuer-specific factors or also to general market movements. 

RISK REPORT 53


Liquidity risk, also understood in the narrower sense as the solvency or refinancing 

risk, is the risk of the Bank not being able to meet its current and future 

payment commitments. The market-liquidity risk describes the risk of the Bank 

being unable to settle or hedge its trading positions on time to the desired extent 

due to the market situation. 

Operational risk is the risk of loss resulting from inadequate or defective 

internal processes and systems, human and technical failures, or from external 

events. The adopted definition is geared to the current supervisory discussion 

and consequently also includes legal risks arising from inadequate contractual 

agreements or from the overall legal framework as part of operational risk. 

Business risk is understood by Commerzbank as the risk of unexpected negative 

developments in results, which may be due to unforeseeable changes in 

business volume or the margin situation on account of changed overall conditions 

such as the market environment, customers’ behaviour or technological 

developments. 

Strategic risk is the risk of unexpected negative developments in results 

stemming from previous or future fundamental business-policy decisions. These 

may take the form of decisions with regard to business lines or business associates 

or the choice of a local strategic approach. 

Reputational risk is the danger of losses or lower earnings on account of 

publicized business occurrences which erode the confidence of the public or 

business associates in the Bank. Reputational risk may result from other types of 

risk or may arise alongside these. 

3) Integration of risk and capital management into the Bank’s 

overall management 

A close meshing of risk and earnings components is especially important for 

value-based overall Bank management. Apart from guaranteeing that the entire 

Bank has a capital base that is adequate for its risk profile, the objective of overall 

management of the Bank is to allocate the resource equity as optimally as 

possible – in other words, to use it in business lines which yield a strong return, 

even with risk taken into consideration. 

All the Group’s risks – insofar as they are quantifiable – are aggregated in a 

risk-taking capability calculation and the overall risk figure worked out for the 

Group is set off against its risk capital. The purpose of this comparison is to 

ascertain whether the Bank is in a position to anticipate potential unexpected 

losses without serious negative effects on its business opportunities and to 

cushion their impact. In order to distinguish it from other definitions of capital 

used in accounting and for regulatory purposes, the calculated risk is also 

referred to as economic capital, as it is economically necessary for cushioning 

unexpected fluctuations in results. 

Commerzbank calculates economic capital by taking market risk, credit risk, 

operational risk and – in the year under review for the first time – also business 

risk into consideration. In the case of market risk, a further distinction is made 

between market risk in the trading book and in the banking book as well as that 

arising from equity holdings. As, in addition to the regulatory core capital that is 

tied up (KWG Principle I), the individual need of the various business lines for 

economic capital is identified, it is generally possible to work out risk-adjusted 

performance.

The chart below shows the percentage share of the various types of risk in 

the Bank’s overall economic capital. 

8% Market risk (trading book) 

7% Market risk (banking book) 

29% Market risk 

(equity holdings) 

42% Credit risk 

9% Operational risk 

5% Business risk 

In order to achieve a more sophisticated risk/return-based overall Bank management, 

Commerzbank’s Board of Managing Directors resolved in the year 

under review that the economic capital concept should be integrated into the 

management of business lines. In this connection, a project for steering via economic 

capital was implemented at Commerzbank, drawing upon external verification 

and validation of the economic-capital approach which was applied. This 

confirmed that the models used met the market standard. In addition last year, 

key parameters for quantifying and aggregating economic capital were adjusted 

to a more conservative view of risk. 

To ensure compatibility between the various risk categories, all types of risk 

are scaled consistently over a twelve-month period. Last year, the confidence 

level of 99.95% used here was far more conservative (previous year: 99.80%). 

With the diversification effects taken into consideration, the economic risk of the 

Commerzbank Group stood at 77.9bn as of December 31, 2003, which cannot be 

directly compared with the year-earlier figure as different assumptions were 

used for the parameters. 

Economic capital in 7 bn 31.12.2003 

Market risk (trading book) 0.8 

Market risk (banking book) 0.7 

Market risk (equity holdings) 2.9 

Credit risk 4.3 

Operational risk 0.9 

Business risk 0.5 

Total 10.1 

Total (after diversification effects) 7.9 

The Bank is convinced that over the medium term the integration of economic 

capital into the management of business lines, using a RAPM (riskadjusted 

performance measurement) approach, will make a notable contribution 

towards raising the Bank’s earnings/profitability. In addition, higher transparency 

will be achieved with regard to the comparability and profit contribution 

of the various business lines under risk and return aspects, and shareholder 

value will be created, as the scarce resource capital will be allocated even more 

efficiently as part of a risk-based overall Bank management. 

Economic capital, 

by type of risk, 

as of 31.12.2003 

RISK REPORT 55


II. Risk-management/risk-control organization 

The organizational structure of risk management and risk control within the 

Commerzbank Group provides the basis for an effective risk- and return-based 

steering of the overall Bank. Risk management implies all the measures appropriate 

for increasing the Bank’s market value on the basis of an active and conscious 

management of all risks by the risk-management units. Risk control, however, 

comprises the identification, quantification, limitation and monitoring, as 

well as the reporting, of risks. On the basis of the quantitative and qualitative 

assessments, risk control also provides recommendations and impulses for the 

operative steering of the front-office units. 

Responsibility for the implementation throughout the Group of the riskpolicy 

guidelines laid down by the Board of Managing Directors lies with the 

Chief Risk Officer (CRO), who in this function regularly informs the Board of 

Managing Directors and the Risk Committee of the Supervisory Board about the 

Group’s overall risk situation. In addition to assuming responsibility for Risk 

Control (ZRC), the CRO is also in charge of Global Credit Operations (ZCO) and 

Credit Operations Private Customers (ZCP). 

For the operative implementation of risk management, the Board of Managing 

Directors have delegated functions to specific committees, which support 

them in making decisions on all risk-relevant issues: 

Risk-management/risk-control organization 

Risk 

identification 

Risk Committee of the Supervisory Board 


Risk strategy 

Risk control Risk management 

Risk 

quantification 

ZRC 

Risk 

transparency 

Risk 

mitigation 

Risk 

Committee 

CRO 

Credit 

Committee 

Independent control: Internal Auditing (ZRev) 

Back office 

(operative 

credit function) 

ZCO* 

ZCP* 

ZKE 

ZRA 

Front office 

ZAM 

ZCB 

ZFI 

ZGS 

ZGT 

ZIM 

ZMC 

ZPK 

* including regional back-office units 

Types of risk 

Credit risk, market risk, 

liquidity risk, operational risk (incl. legal risk), 

business risk, strategic risk 

ALCO

The Credit Committee – chaired by the CRO, and made up of equal numbers 

of front- and back-office personnel – is responsible for the entire credit risk at 

the individual and portfolio level. Within the overall hierarchy of loan 

approval powers, it decides all of Commerzbank’s lending commitments of 

up to 2% of its liable equity and also issues a recommendation on all the 

lending decisions to be taken by the Board of Managing Directors. In addition 

to the Credit Committee, further head-office and regional sub-credit committees 

exist which, depending on the size of the commitment, can take lending 

decisions independently. 

The Risk Committee, chaired by the CRO, is responsible for issues related to 

the monitoring of all the major types of risk, as well as their aggregation as 

part of the economic-capital approach and for the overall risk situation; it also 

helps the Board of Managing Directors in formulating the risk strategy. 

As a sub-committee of the Risk Committee, the New Product Committee is 

made up of representatives of various trading units and service departments 

and is chaired by the head of ZRC. It is responsible for approving the introduction 

of new products and markets. 

The Operational Risk Committee (OpRiskCo), chaired by ZRC, performs its 

function as a sub-committee of the Risk Committee in dealing with all the 

broader issues relating to operational risk. 

The Asset Liability Committee (ALCO), chaired by the Board member responsible 

for treasury, determines the Bank’s asset/liability and liquidity strategy 

and policy. 

1) Risk control 

Overall responsibility for Group-wide risk control for all types of risk lies with 

Risk Control (ZRC), which reports directly to the CRO. 

The core functions of ZRC within the risk-control process include the ongoing 

identification, evaluation and monitoring of market, credit, business and operational 

risks in particular and also their proactive control. To ensure uniform risk 

standards throughout the Group, ZRC works out internal guidelines for dealing 

with all the major types of risk, also establishing and refining adequate methods 

for quantifying risk. In addition, ZRC is responsible for internal and external risk 

reporting and performs within the Bank an advisory function on all risk-relevant 

issues and with regard to the conception of the risk strategy. 

Apart from implementing risk-related supervisory requirements, ZRC concentrates 

on preparing information for the Board of Managing Directors and 

producing quantitative risk analyses and key ratios for steering trading portfolios. 

A central role here is played by the Group-wide aggregation of all types 

of risk to form an overall risk position and the development of an ever more 

sophisticated risk- and return-oriented overall Bank management as part of the 

economic-capital approach. 

RISK REPORT 57


2) Risk management: the operative credit function (back office) 

Commerzbank sees itself as a pioneer in implementing throughout the Group 

the organizational pattern and structuring of operations called for by the “Minimum 

requirements for the lending business of credit institutions” (MaK). Last 

year, the restructuring of credit risk management along MaK lines, begun in 

2002, was completely concluded worldwide. As required by MaK, the independence 

of lending decisions from the front office has been ensured by the systematic 

separation of sales and risk assessment/risk decision-making in every 

phase of the credit process and up to management board level. 

For corporate customers, financial institutions and banks worldwide, as well 

as for private customers abroad, the operative credit function (back office) has 

been concentrated on the Global Credit Operations (ZCO) banking department. 

For retail customer business in Germany, the back-office function is performed 

by the Credit Operations Private Customers (ZCP) department. Both departments 

are organized along decentralized lines and monitor risk closely; they report 

directly to the CRO. 

In both corporate and retail business, credit-approval powers are clearly 

structured according to the principle of committee decision-making. All committees, 

in which the two sides are equally represented, are chaired by credit-analysis 

and approval specialists. Below management board level, a credit may not be 

granted if the representative of the back-office side votes against it. At each level 

of approval, the front-office side has the possibility of declaring its disagreement. 

The decision is then taken at the next highest level. 

Thanks to the existence of a distinct interface for the intensive treatment of 

commitments which are latently endangered to a great extent and also to the 

firm responsibility of the credit side for intensive treatment commitments, problem 

credits can be treated intensively at an early stage. For this purpose, units 

have been installed both at head office and at the regional level specializing in 

the handling of such commitments. The prime goal of this intensive treatment is 

to improve the Bank’s risk position and, wherever possible, to return the intensive-treatment 

loans to the better credit brackets. In cases in which it is thought 

possible to improve the Bank’s risk position considerably through operative 

action, the Bank seeks a lead-manager role, drawing upon its entire expertise. 

Above all in cases where the Bank can exert little influence, alternative exit possibilities 

are increasingly sought. In particular, this includes the identification of 

credits in poor risk categories which can be reduced through secondary-market 

activities and the introduction of the respective measures. Secondary-market 

activities help to mitigate risk, taking into account the cost/benefit ratio, and also 

to release tied-up capital. 

In addition to their traditional credit function, ZCP and ZCO maintain their 

own head-office risk-management departments for operative credit portfolio 

management. Their core functions are to analyse the development of relevant 

parts of portfolios and sectors (volume, risk concentration, risk/return ratio, provisioning) 

and also the development of solutions for making portfolios more 

dynamic and improving them. Transactions are closely coordinated between 

front- and back-office teams.

3) Risk management: operative risk-steering of market units (front office) 

Within the scope of their business activities, the individual divisions and subsidiaries 

of the Bank bear immediate responsibility for risk and earnings. 

Risk management in the narrower sense – i.e. the operative steering of risk – is 

handled for the various types of risk – with the exception of credit risk – on a 

local basis by the relevant market units. These local risk units are also responsible 

within their division for implementing and observing the Group’s risk standards. 

Responsibility for steering operational risk – insofar as systems, processes 

and technology are affected – is borne by the head-office service departments. 

The steering of legal risk is entrusted to the Legal Services staff department 

(ZRA), while responsibility for strategic risk lies with the Strategy and Controlling 

staff department (ZKE). 

4) Internal risk reporting 

Prompt, objective reporting is of special significance in managing risk. The central 

information medium and steering instrument for internal purposes is the 

monthly risk report produced by the Risk Control department, which is presented 

by the CRO to the Risk Committee, the Board of Managing Directors and 

the Risk Committee of the Supervisory Board. 

The monthly risk report contains detailed evaluations and presentations of 

all the major types of risk within the Commerzbank Group, aggregating them 

–insofar as they are quantifiable – into an overall risk position. As part of the calculation 

of risk-taking capability, the identified risks are set off against the regulatory 

and economic capital for risk coverage. If necessary, the report is adjusted 

to accommodate current developments and presents the latest status of major 

projects relevant for risk (e.g. Basel II, MaK). At the same time, it forms the basis 

for presenting risk data to supervisory bodies and rating agencies. 

5) Internal auditing 

The functioning and adequacy of all risk-control and risk-management activities 

are examined by the Internal Auditing staff department (ZRev) in accordance 

with the Minimum requirements for the organization of the internal auditing 

function (MaIR). Internal Auditing forms an integral part of the Group-wide riskcontrol 

and risk-management system and works, free from directives and external 

influence, as a unit independent of business processes with the goal of 

identifying risk at an early stage and monitoring it. In the course of its auditing 

activities, it monitors compliance with both internal and supervisory standards 

such as the Minimum requirements for the trading activities of credit institutions 

(MaH). 

The main emphasis in internal auditing is on testing and assessing the effectiveness 

of both security measures built into the work process and existing internal 

checks, as well as on reporting on the structure, functioning and adequacy of 

risk monitoring to the Bank’s management and the Group units affected. Riskoriented 

auditing includes the recognition, analysis, limitation, limit monitoring 

and reporting of credit and market risk, as well as the establishment and limitation 

of operational risk. 

RISK REPORT 59


6) Implementation of developments in supervision: Basel II and MaK 

For Commerzbank’s risk strategy, the changes in the overall framework of 

banking supervision are also of crucial importance. Currently, the main factors 

here are the introduction of the Minimum requirements for the lending business 

of credit institutions (MaK) and the implementation of the New Basel Capital 

Accord (Basel II). 

A principal goal of the New Capital Accord of the Basel Committee on 

Banking Supervision (Basel II) is to promote the security and stability of the 

banking and financial system. In addition to the risks involved having to be 

reflected in the capital backing provided for credits, the other central elements 

of Basel II requirements are the elaboration of banks’ internal systems of control, 

their monitoring by the supervisory authorities and market discipline. According 

to current plans, banks are supposed to implement the new capital accord by 

end-2006. 

The introduction of the new capital requirements will lead to a convergence 

of the regulatory and the economic views of risk; it makes possible an analysis 

of risk at the portfolio level and thus also lays the basis for a risk-adjusted steering 

of the overall Bank. For implementing the Basel II requirements, a project 

team was set up in the Risk Control department in 2001. Working together with 

the banking departments, the staff departments and subsidiaries, it coordinates 

the implementation of the Basel II requirements throughout the Group. 

In addition to the technical and substantive implementation of Basel II, the 

project is already looking into the time “afterwards”, i.e. the impact of the 

new capital adequacy rules after Basel II, and is instigating the relevant 

activities. Through its participation in international and national bodies such 

as the Institute of International Finance (IIF) and the risk-policy committee of 

the Bundesverband deutscher Banken (Association of German Banks), 

Commerzbank is also involved in the substantive discussion for developing the 

rules further. 

The Minimum requirements for the lending business of credit institutions 

(MaK), published by the German Financial Supervisory Authority in 2002, define 

qualitative standards for the organization of credit business to be met by German 

banks by June 30, 2004. Should adjustments be necessary in the IT area, 

the deadline for implementation can be extended until end-2005. 

The requirements mainly focus on ensuring an adequate risk environment, 

within which credit business may be conducted. Banks are obliged, therefore, to 

create and internally implement the overall conditions for establishing the 

appropriate organization and procedures for credit business and also for the 

development of methods for identifying, steering and monitoring credit risk. 

Prominent among the overall conditions is the formulation of a credit-risk 

strategy, in which credit activities are defined for an appropriate planning 

period. Here, the existing credit-risk strategy has been refined in accordance 

with regulatory requirements with the cooperation of the market and credit 

units. This also took into account the Bank’s risk-taking capability as well as an 

analysis of the given business situation and the related risks.

The core requirement of MaK as regards organization is the separation of 

front- and back-office functions. The credit-risk control function consists of an 

independent monitoring of risk at the portfolio level and independent reporting. 

Here, Commerzbank has already met the standards for loan-approval procedures 

and the organizational separation of front- and back-office functions. More farreaching 

requirements, such as the implementation of risk-classification methods 

have similarly already been met, but they are being made more sophisticated 

in order to achieve a constant improvement in the methods applied. 

For the purpose of realizing further MaK requirements, a detailed target/ 

performance comparison and analysis of the fields of activity were drawn up 

for Commerzbank’s entire lending business pursuant to Art. 19, (1), German 

Banking Act – KWG. Drawing upon these findings, the Bank has begun to build 

up a comprehensive data warehouse to store the combined MaK and Basel II 

data for the implementation of the necessary adjustments in the IT area. 

The MaK project, launched at end-2002, was meshed even more closely with 

the existing Basel II project in the year under review in order to guarantee a consistent 

database for implementation throughout the Group. 

III. Risk-control/risk-management process 

1) Monitoring and controlling credit risk 

The credit-risk strategy elaborated with a view to the Minimum requirements for 

the lending business of credit institutions (MaK) describes the planned lending 

activities, thus creating important strategic impulses. With the Bank’s general 

risk appetite taken into consideration, the starting point in this respect is a critical 

analysis of the strengths and weaknesses of the current credit portfolio. Complemented 

by a forward-looking evaluation of the opportunities and risks in the 

target markets, this provides the framework for the definition of a risk/returnoriented 

target portfolio together with the related planning of measures. 

In the realization of the targeted risk/reward profile, this “benchmark portfolio” 

forms the basis for Group-wide portfolio-management activities. Apart 

from the acquisition of new customers from specific target groups, these also 

include the conscious use of asset trading, credit derivatives and asset-backed 

securities (ABS), thereby covering the entire spectrum of the initiatives of business 

lines. In order to ensure that actions conform to the credit-risk strategy and 

to restrict concentrations of risk, Risk Control establishes risk ceilings for sections 

of portfolios and concentration risks (business lines, sectors, products and 

regions). As part of a comprehensive controlling process, utilization of these 

caps is subjected to constant independent monitoring and reporting. 

Internal rating system 

For many years, Commerzbank has drawn upon detailed rating and scoring procedures 

for checking creditworthiness and standardizing credit decisions. These 

are binding for our branches and subsidiaries in Germany and elsewhere. Borrowers 

are assigned to ten different rating levels, ranging from 1.0 (exceptionally 

good creditworthiness) to 5.5 (very weak creditworthiness) as well as 

two rating levels for problem loans (6.0 for pre-work-out commitments and 6.5 

for work-out commitments). 

RISK REPORT 61


The internal rating procedures are continually being further developed and 

undergo a regular validation procedure, in which adequate methods are used to 

check the ability of every rating system to classify risks properly. In order to 

ensure that all of the Bank’s lending commitments are covered by ratings and 

that the rating procedures are applied uniformly throughout the Group with the 

various accounting standards taken into consideration, permanent professional 

checks and documentation assume a key role. 

Commerzbank has accepted the structural change in the German credit market 

and the statutory requirements expected on account of the Basel capital 

adequacy rules as an opportunity and is currently subjecting its existing rating 

systems to efficient professional and technical checks and also revision. The aim 

is to secure and build upon our strategic competitive edge by consistently realizing 

risk-adjusted pricing on the basis of best-practice rating tools. To achieve 

these ambitious goals, the Bank is taking extensive measures in the credit-risk 

area in order to recognize the Basel II Internal Ratings-Based (IRB) Advanced 

Approach. 

Assessing creditworthiness in corporate business 

The rating for Mittelstand clients based in Germany is calculated with the help 

of an expert system Codex, which analyses the key figures of the financial statements, 

but also takes qualitative company data into account. 

Commerzbank regards its rating system for corporate business as a distinct 

competitive advantage and decided last year to pursue a stronger mathematicalstatistical 

approach, in addition to the assessment of experts, in the methods it 

applies in rating corporate customers. In 2004, these models will be refined and 

combined with the existing methods. It is Commerzbank’s aim to achieve better 

portfolio diversification and thereby reduce its cost of capital and average margins. 

Assessing creditworthiness in retail business 

In its retail lending, Commerzbank has successfully used application scoring 

procedures and rating methods for assessing the creditworthiness of both 

dependently employed borrowers and business customers for several years 

now. All of these methods are computer-based and draw upon acknowledged 

and highly reliable, predominantly mathematical-statistical methods for the 

early recognition of risk. In addition, Commerzbank has introduced a behavioural-scoring 

procedure on a nationwide basis, which – monitoring in-payments 

and the customer’s payment record – makes a permanent and fully automatic 

monitoring and adjustment of limits possible for over one million customers 

maintaining accounts for payment transactions. It is to be extended to business 

customers who do not have to prepare a balance sheet. 

The procedures that are relevant for ratings, whose employment depends, 

for example, on the customer group in question or the use to which the credit is 

to be put, have been added to step by step. The behavioural scoring developed 

by Commerzbank has been steadily refined in order to make possible a constant 

computer-based evaluation of the creditworthiness of dependently employed

orrowers. Even today, therefore, a regulatory requirement has been met 

which will become effective in 2007 when the new Basel Accord is implemented. 

As a rule, it is not necessary for borrowers to become actively involved in this 

process (e.g. by making available income statements, etc.) insofar as this does 

not violate statutory requirements. 

Quantification of credit-portfolio risk 

Commerzbank’s internal credit-risk model is of key importance for risk monitoring, 

portfolio management and steering sales efforts. It provides important data 

for quantifying credit risk in moving towards an overall Bank management 

based on economic capital. The portfolio model’s range of application stretches 

from the global, Group-wide monitoring of portfolios to measuring the risk 

contributions for individual transactions. As a result, the results produced by 

the model are reflected in risk measurement and sales management in a variety 

of ways. 

The main result produced by the portfolio model is the so-called loss distribution, 

permitting probability statements on possible losses in credit business. 

From this, both the expected loss (EL) and the credit value-at-risk (credit VaR) as 

the measure of unexpected loss (UL) are derived. For a given confidence level, 

the credit VaR represents an upper estimate of the extent to which the potential 

loss of a credit portfolio may exceed the expected loss. At the same time, the 

credit VaR for the Group portfolio represents the credit-risk portion of the Bank’s 

economic capital. In a revision of the parameters designed to produce a more 

conservative approach to risk, the confidence level used has been raised from 

99.80% to 99.95%. 

Quantification of the credit value-at-risk within the Commerzbank Group is 

based on the CreditRisk+ model, which is widely used in banking; however, 

it has been substantially refined and adapted to the specific requirements of 

Commerzbank. The model makes possible, for instance, a risk-adjusted redistribution 

of the portfolio and diversification effects right down to individual customer 

level on the basis of conditional expectations. In this way, the relative 

share of the overall credit risk borne by the individual units can be determined 

at various levels of aggregation. 

A variety of risk factors and parameters are included in the model. Apart from 

estimates of the exposure to be expected in the case of default and the conservative 

recognition of collateral, guarantees and netting agreements, these also 

incorporate such statistical quantities as default rates, recovery rates und sectoral 

correlations. As part of the ongoing modification of the model, the input 

parameters for calculating risk were altered in 2003. In particular, further results 

of the statistical methods of estimation implemented as part of the Basel II 

project were integrated into the model. Together with the raising of the confidence 

level, this led to a marked increase in the credit VaR as well as a slight 

rise in the expected loss. 

All told, the Group’s credit VaR per December 2003 was 74.3bn and its 

expected loss 71.25bn. The median for the loss distribution, serving as a yardstick 

for the potential loss which with 50% probability will not be reached, is 

RISK REPORT 63


Expected loss and 

credit value-at-risk 

as of 31.12.2003 

Breakdown by business line, 

in 7 m 

somewhat below 71.1bn. If the model with its new parameters is retroactively 

applied to December 2002, it becomes evident that the 2003 financial year was 

characterized by a lowering of credit risk (reduction of expected loss and credit 

VaR by 7.5% and 13.8%, respectively). 

Corporate Banking, Germany 

Corporate Banking, abroad 


Subsidiaries 

Multinational Corporates 

Securities 

Financial Institutions 


Treasury 

EL 

Credit VaR 

0 500 1000 1500 2000 

The above chart shows the contributions of the various business lines to the 

Group’s expected loss and credit VaR. In the traditional Mittelstand segment 

(Corporate Banking), where the Bank’s main credit risk develops, the ratio of 

unexpected to expected risk is roughly 3:1. Given a high level of diversification, 

this relationship is more favourable in retail business, where expected loss is 

more important as a result. In business involving multinational corporates and 

in investment-banking areas, however, the risk is significantly determined by 

unexpected loss, as the structure of creditworthiness is generally very good here 

and bulk risks alone with their volatility represent a potential loss. 

For portfolio-management purposes, the expect loss and credit VaR shares of 

individual sectors are additionally worked out and a loss-at-default value is 

assigned to each sector. The risk volume (loss-at-default [LaD]) of an individual 

transaction is defined as the forecast loss in the case of a customer’s default 

– with collateral and recovery factors taken into consideration. It may therefore 

be interpreted as a risk-adjusted credit volume. 

The risk data discussed up to now make it possible to assess credit risk for a 

one-year time frame (risk measurement). These variables provide key information 

for portfolio management, the calculation of risk-taking capability and the 

implementation of the credit-risk strategy between the two poles of risk and 

return. 

For longer time frames, the portfolio model is used to work out standard risk 

costs and economic capital costs as well, which provide sales personnel with 

customer-specific signals. The standard risk costs are used in calculating the 

return-on-equity (RoE) at the level of the individual transaction. As part of the 

transition, begun in 2003, to the economic value added as the control variable, 

the economic capital costs are successively being integrated into the steering of 

business relationships with individual customers. To an increasing extent, they

are being used in the Bank’s risk-adjusted pricing and define a system of incentives 

in the acquisition of new and follow-up business. In this way, it is ensured 

that the portfolio targets established by the Bank under its credit-risk strategy 

are already observed at the loan origination level. 

Credit-approval powers 

The basis for managing credit risk throughout the Group is a structure of ratingrelated 

credit approval powers, which also extends to the subsidiaries 

Hypothekenbank in Essen and Erste Europäische Pfandbrief- und Kommunalkreditbank 

(EEPK). 

Credit decisions for individual borrowers or groups of borrowers are made 

on the basis of either the aggregated exposure pursuant to Art. 19, (2), German 

Banking Act – KWG (borrower unit), or a larger economic risk entity. The Board 

of Managing Directors has delegated credit decisions up to a maximum amount 

of 2% of the liable equity to the central credit committee chaired by the CRO. 

Sub-credit committees at head office (up to 1% of liable equity) for banks, corporate 

and retail customers and regional sub-credit committees on the corporate 

and retail side in Germany and abroad complete the picture of credit-approval 

powers. The credit committees are made up of representatives of the front and 

back office in equal numbers. 

By way of preparation for the MaK, the credit-approval powers delegated 

ad personam were scaled back, according to the degree of creditworthiness, to 

a low euro figure in the double-digit millions and the lending powers of the committee 

were strengthened. The result in terms of risk underlines the success of 

this structure of credit-approval powers. 

Monitoring of credit risk for trading activities 

In Commerzbank’s management of the Group’s credit risks arising from trading 

activities, special attention is paid to counterparty and issuer risk. A system of 

limits is used to monitor whether daily utilization remains within the set framework. 

The system of limits directly intervenes in trading systems and ensures 

that credit exposure arising from trading activities is monitored globally, in real 

time, and right around the clock. 

The size of the credit risk for trading activities is worked out using simulation 

methods, which project credit risks on to the future. Here, the risk-mitigating 

effects of netting agreements are taken into consideration, as is the effect of 

collateral agreements. In addition to such information, trading units are 

provided with data on whether the relevant limits are available. Only if the socalled 

pre-deal limit check has confirmed that free trading lines are available 

may deals be concluded. Limit breaches are reported daily to the management. 

By means of a graduated procedure, such overruns are brought back within the 

set limits. 

RISK REPORT 65


The 20 largest 

sub-standard loans 

(ratings 4.5-5.5) 

in 7 m 

7,000 

6,000 

5,000 

4,000 

3,000 

2,000 

1,000 

0 

12/02 12/03 

The 20 largest 

problem loans 

(ratings 6.0-6.5) 

in 7 m 

2,000 

1,750 

1,500 

1,250 

1,000 

750 

500 

250 

0 

12/02 12/03 

performing 

non-performing 

High coverage ratio for 

non-performing loans 

in 7 m 

Development of risk and risk provisioning 

Doubtful credit exposures are classified by rating and kept in a special IT system, 

which makes it possible to process individual transactions effectively and to 

monitor risks. Discernible credit risks are taken account of by forming the appropriate 

provisions. For latent risks general provisions are formed. For concrete 

creditworthiness risks – which are indicated by the rating – provision is made, 

applying Group-wide standards, by means of specific valuation allowances on 

the scale of the potential loss. The amount of provisioning required for problem 

loans (rating of 6.0 to 6.5) is gauged by the unsecured part of the exposure. An 

individual assessment of the borrower in terms of future payments is also incorporated 

into the calculation of the need for provisioning. 

In international credit business, the economic and political situation of the 

country is also reflected in the overall assessment of a borrower. For loans to 

borrowers with an enhanced country risk (transfer or event risk), provisions are 

formed, if necessary, on the unsecured exposure, reflecting the relevant internal 

country rating, in the form of provision for country or individual risks, with 

priority always given to the latter type. 

The adequacy of the Bank’s risk provisioning is regularly monitored at the 

portfolio level. In addition, the expected need for provisions throughout the 

entire financial year is worked out each spring and autumn on the basis of careful 

bottom-up estimates. These are complemented in the course of the year by 

further regular top-down estimates. As a rule, after the conclusion of insolvency 

proceedings, after disposal or after an accord has been reached, or debt forgiveness 

at the expense of existing provisions, the claims are removed from the 

books and residual amounts are written off or reversed. 

Despite last year’s persistently high level of insolvencies, it proved possible 

to lower the Group’s net loan loss provision ratio by 11 basis points to 0.66% 

compared with 2002, putting Commerzbank in a good position relative to its 

competitors. The conservative approach to working out provisioning needs was 

retained; the actual amount required fell considerably short of the budgeted 

figure. The write-off ratio in 2003 also reflects direct write-offs through the 

proactive sale of critically assessed performing loans. As a result, the Bank has 

limited its unexpected loss in the years ahead. Despite additional burdens 

imposed by the last few weeks of the year, the Bank achieved its target for provisioning 

of just under 71.1bn. In addition, thanks to active risk management, 

the problem of major increasingly latent risks could be reduced. 

8,000 

7,000 

6,000 

5,000 

4,000 

3,000 

2,000 

1,000 

0 

Excess cover 

7542m 

6,846 

7,388 

5,320 

385 

1,683 

Excess cover 

7634m 

7,077 

7,711 

5,506 

348 

1,857 

31.12.2002 31.12.2003 

Non-performing loans 

Collateral 

Country valuation allowances and 

global valuation allowances 

Loan loss provisions

1.40 

1.20 

1.00 

0.80 

0.60 

0.40 

0.20 

0 

0.70 

1.30 

0.70 

0.50 

0.12 0.11 0.15 0.17 

0.60 

0.29 

0.50 0.50 

0.46 0.21 

Country risk 

In view of the international character of Commerzbank’s business activities, the 

monitoring and management of country risk is especially important. The essential 

core of country-risk monitoring is formed by a well-established so-called 

traffic-lights system which points the direction for future business activities and 

lending. 

Country ratings are worked out and constantly updated by the Corporate 

Communications and Economic Research staff department, which is independent 

of the market side. Under the traffic-lights system, groups of countries with 

a rating of 3.0 and lower and a certain minimum exposure are covered. 

The system distinguishes between commercial banking, investment banking 

and equity holdings, on the one hand, and short and medium/long-term exposures, 

on the other. For risk optimization purposes, the Bank has extended its 

controlling for a number of countries to so-called total exposure. This takes 

account not only of the net country exposure but also of the claims in a non-risk 

country on the foreign outlets and subsidiaries of a parent company based in a 

risk country. 

The monitoring of country risk/exposure occurs at monthly intervals. A 

reporting system is used for possible discrepancies between the projected 

trends and the actual development of the Bank’s exposure, enabling countermeasures 

to be taken promptly. Country-risk reports appear at periodic intervals, 

describing the development of individual countries and regions and establishing 

guidelines for future lending. In this way, we achieve risk-oriented control and 

geographical diversification in our exposure abroad. 

0.30 

0.15 

0.29 

0.39 

0.35 0.28 

Allocation ratio 1) 

Write-off ratio 2) 

0.77 

0.66 

0.48 0.50 

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 

1) Net provision for risks as a ratio of average commercial loan portfolio, with valuation allowances 

deducted; 

2) Write-offs as a percentage of average commercial loan portfolio 

74% CR 1 

11% CR 2 

7% CR 3 

6% CR 4 

1% CR 5 

1% CR 6 

CR = country rating 

RISK REPORT 67 

Provisioning of 

Commerzbank Group 

Valuation allowances and 

loan losses (excl. country 

risks), 1992-2003 

Country risk, 

by rating group 

as of 31.12.2003


Credit derivatives 

(trading book) 

as of 31.12.2003 

Reference assets, 

by rating class, in 7 m 

Sectoral and bulk risks 

Sectors are similarly managed by means of a limits/traffic-lights system. The 

internal assessment (scoring system) and the degree to which a sectoral limit 

has been exhausted determine the colour of the traffic lights, which steers sales 

efforts, using resources economically, and indicates where the Bank seeks new 

business and where its commitment is deemed to be large enough. In the case 

of bulk risks, the traffic lights are determined by the use of economic capital, 

with use of more than 720m representing a critical ceiling for borrower groups. 

In addition to steering new business activities, Global Credit Operations performs 

active portfolio management (exits, disposal, and above all risk coverage) 

in close coordination with the front office and trading units. Apart from the steering 

of new business by means of selective instructions with regard to lending, 

therefore, the creation of a more dynamic portfolio is a major feature of the management 

of sectoral risk. 

Use of credit derivatives 

Commerzbank looks upon products which transfer credit risk as an important 

instrument for managing such risk, taking portfolio-management aspects into 

consideration. The Bank’s credit-trading activities are primarily in proprietary 

trading as a market maker, above all for credit default swaps (CDS). At the same 

time, Commerzbank offers its customers structured, derivative credit products. 

5.0 

4.5 

4.0 

3.5 

3.0 

2.5 

2.0 

1.5 

1.0 

Protection sold Protection bought 

-30,000 -20,000 -10,000 0 10,000 20,000 30,000 

In addition to trading activities, Commerzbank employs credit derivatives in 

its banking book, with the focus on both limiting risk and selectively taking on 

credit risk. For this purpose, a team has been set up in credit derivative trading 

specially to hedge major credit exposures in the banking book. This team uses 

the centralized risk-management platform of the trading section and – observing 

the internal credit guidelines – also invests in credit derivative products in order 

to diversify the portfolio and make use of open credit lines. Through deliberate 

investment in these products, extra earnings potential is tapped and new asset 

classes explored.

Securitization transactions 

Commerzbank AG is one of the leading issuers of ABS/MBS transactions in 

Europe. Its issuing activity is mainly concentrated on the structuring of synthetic 

securitizations. In these, the credit risks of the securitization pool are hedged by 

credit default swaps against third parties and transferred to investors by placing 

credit-linked notes. In addition to synthetic structures, balance-sheet claims are 

also securitized to a lesser extent in the form of a true sale securitization. Here, 

the claims – arising from trade bills – are legally assigned to a special-purpose 

entity, which then, for its part, issues securities. Up to now, mainly private and 

commercial mortgage loans and corporate credits have found their way into the 

securitization pool. 

Commerzbank uses securitizations as defined by the new Basel capital 

accord (Basel II) as an originator for the significant transfer of credit risk, taking 

into consideration portfolio-management effects and in order to achieve a better 

diversification of risk. In addition, the Bank is active to a reasonable extent as an 

investor (in accordance with the Basel II definition) in ABS instruments. 

The following table presents an overview of Commerzbank’s securitized 

assets (nominal volume of in-house securitization programmes as of December 

31, 2003): 

Nominal amount in 7 m 

Collateralized loan obligations (CLO)* 6,305 

Residential mortgage-backed securities (RMBS) 6,983 

Trade bills* 193 

Total 13,481 

* As CLO and trade-bill securitizations also represent revolving pools, the actual securitized volume in 

2003 was 728,722m and 71,248m, respectively. 

Reporting for credit risk 

For credit risk, Commerzbank uses an intranet-based management information 

system, CoMKIS. As an integral part of Group-wide credit-risk control, CoMKIS 

makes it possible to present the main steering parameters and important risk 

data; it can also be used to perform individual evaluations, such as rating- or 

sector-based portfolio analyses. In this way, analyses of weak points may be 

made on the basis of various search criteria and early-recognition indicators can 

be defined and evaluated. In addition, new indicators are provided for measuring 

portfolio quality. These are, for instance, rating-migration analyses, including 

the related upgrade/downgrade ratios. 

RISK REPORT 69


Borrowing, 

by rating structure 

Commercial banking 

(gross, before collateral 

and provisioning) 

as of 31.12.2003 

in per cent 

Borrowing, 

by rating structure 


as of 31.12.2003 

in per cent 

Regions of 

foreign exposure 

as of 31.12.2003 

35 

30 

25 

20 

15 

10 

5 

0 

70 

60 

50 

40 

30 

20 

10 

0 

12.4 

3.7 

23.1 22.9 

26.6 

31.9 

21.9 24.2 

7.6 7.5 

2.0 1.7 

December 2002 

December 2003 

n.r. R1 R2 R3 R4 R5 R6 

0.1 0.0 

65.3 61.3 

27.2 28.5 

5.7 8.7 

6.4 8.0 

December 2002 

December 2003 

1.2 1.1 0.3 0.2 0.1 0.2 

n.r. R1 R2 R3 R4 R5 R6 

The CoMKIS information, covering both German and foreign credit business, 

is incorporated into the credit section of the monthly risk report. The risk-management 

departments of the Group units in Germany and elsewhere have direct 

intranet access to CoMKIS. The control information available through CoMKIS 

permits a detailed analysis of portfolio developments over time and serve as a 

basis for launching risk-limiting measures. 

Credit risk arising from trading transactions is reported on the basis of the 

Minimum requirements for the trading activities of credit institutions (MaH). 

Limit breaches are reported daily to the management. In addition, the management 

is informed every month about the largest drawings in off-balance 

business. Furthermore, limits and exposures are reported by type of business, 

maturity of transaction, country, risk classification and counterparty category. 

Portfolio reports are also prepared on a regular basis for certain groups of counterparties. 

1.1% Africa (excl. North Africa) 

0.6% Central/South America 

1.6% Internat. Caribbean 

financial centres 

0.6% Internat. organizations 

72.0% Europe and Turkey 

15.2% North America 

7.5% Asia/Pacific 

1.4% Middle East and 

North Africa

2) Monitoring and controlling market risk 

At Commerzbank, a model for the internal management of specific interest-rate 

risks has been used since 2001. In 2002, it became one of the first banks to 

receive approval from the German Financial Supervisory Authority to work out 

the capital backing required for specific interest-rate risks on the basis of this 

internal model. This permits the Bank to save a significant amount of capital as 

far as this type of risk is concerned. In order to measure the capital required to 

cover general and specific market risk, Commerzbank applies an internal model, 

that is also used at the Parent Bank and its foreign branches. It covers the equity 

(including residual risk), interest-rate and foreign-exchange risk categories. 

Value-at-risk approach 

The value-at-risk (VaR) method is the procedure currently used by the majority 

of all internationally active banks for measuring market risk. The value-at-risk 

indicates the maximum loss in value of a portfolio with a given degree of probability 

(confidence level). It is assumed that the composition of the portfolio 

remains unchanged during the holding period. A value-at-risk of 71m at a 99% 

confidence level and a one-day holding period means that a loss of more than 

71m within one day will only occur with a probability of no more than 1%. 

Historical simulation for general market risk 

In order to calculate the value-at-risk of trading portfolios, the historical simulation 

method is employed at Commerzbank for the general market risk. Changes 

in interest rates, currencies, equity prices and volatility are incorporated directly 

into the historical simulation. A special advantage of this method is that it is 

fairly easy to calculate the overall risk on the basis of the individual results for 

lower portfolio levels. 

Variance-covariance approach for specific risk 

Credit trading has become increasingly important in recent years. Here the variance-covariance 

method is practical, since it always employs simple approximations 

for the risk factors themselves and, unlike historical simulation, is 

robust as regards the historical market data. 

Aggregated value-at-risk 

The Group-wide internal calculation of the value-at-risk covers the trading units 

ZGS and ZGT, as well as the interest-rate and currency risk of Asset Management, 

the mortgage banks and other subsidiaries. The following table shows the 

value-at-risk of the Group and the largest units. 

Group ZGS ZGT Essen Hyp 

in 7 m 2003 2002 2003 2002 2003 2002 2003 2002 

Maximum 62.1 72.8 19.9 18.6 27.7 24.8 29.9 29.8 

Median 41.4 50.5 15.5 9.9 15.7 15.6 18.4 26.6 

Minimum 25.7 32.8 9.1 5.2 9.3 9.4 8.6 18.6 

Year-end figure 50.0 37.0 19.9 16.2 16.9 14.9 17.6 19.1 

RISK REPORT 71


Value-at-risk in the 

course of 2003 

Weekly averages, in 7 m 

1-day holding period, 

97.5% confidence level 

Percentage distribution 

of market risk 

as of 31.12.2003 

1-day holding period, 

97.5% confidence level 

Back-testing in the 


in 7 m 

70 

60 

50 

40 

30 

20 

10 

0 

Group VaR ZGT VaR 

ZGS VaR Essen Hyp VaR 

Jan. Feb. March Apr. May June July Aug. Sep. Oct. Nov. Dec. 

32.5% ZGS 

28.9% Essen Hyp 

27.5% ZGT 

6.7% ZAM 

4.4% Other 

Back-testing 

In order to assess and steadily improve the forecasting quality of the internal 

market-risk model and also to meet supervisory requirements, the reliability of 

the VaR methods that are applied is regularly checked. This begins with a retrospective 

comparison of the forecast risks with the profits and losses which 

would have occurred under the assumption of unchanged positions (so-called 

”clean back-testing”). 

Accordingly, the VaR – based on a 1-day holding period – at the 99% confidence 

interval should be exceeded by such a loss in merely 1% of all the trading 

days that are examined. The total number of these exceptions is used by the 

supervisory authorities in evaluating internal risk models. Upon this basis, regulatory 

capital is calculated. 

30 

20 

10 

0 

-10 

-20 

Back-testing P&L VaR 97.5% VaR 99% 

-30 


In the 2003 financial year, one exception was noted at Group level due to a 

sharp rise in euro and US dollar interest-rate curves on June 17, 2003. This outcome 

is in line with statistical expectations and underlines the quality of the risk 

model used.

Apart from this approach, Commerzbank uses a series of additional methods 

for assessing and refining its risk model. These tests confirm the validity and 

forecasting power of Commerzbank’s internal models. 

Stress testing and sensitivity analysis 

As the value-at-risk method mostly fails to take extreme market movements into 

account, the quality and reliability of risk quantification are complemented by 

additional analyses. Among other things, these analyses consist of stress tests 

and, using stress scenarios, evaluate the scale of losses under extreme market 

conditions, such as those which could be observed in past crisis situations. 

The stress tests that are employed as part of daily reporting differ from business 

line to business line and are adapted to accommodate individual portfolios. 

In addition, a so-called global test was introduced in the year under review, in 

which several historical crisis scenarios – such as the 1992 currency crisis, September 

11, 2001 – and their impact are simulated at regular intervals throughout 

the Group. 

350 

300 

250 

200 

150 

100 

50 

ZGT stress test ZGS stress test Essen Hyp stress test 

0 


The stress tests are complemented by various sensitivity analyses. These 

reveal the sensitivity with which the performance of a portfolio responds to a 

change in the risk factors – such as interest rates. The findings of the global 

stress tests and the sensitivity analyses are regularly presented to the Risk Committee 

and the Board of Managing Directors. 

Interest-rate risk 

The Commerzbank Group’s interest-rate risk results not only from the already 

identified general market risk of the trading books, but also from investmentbook 

positions. In the banking book, interest-rate risks mainly arise through different 

maturities for the Bank’s assets and liabilities – for example, due to the 

short-term funding of long-dated credits. In measuring interest-rate risks, we 

include both balance-sheet interest items and the related hedging transactions. 

As in the treatment of the trading book, the interest-rate risk of the banking 

book is measured using a net present value approach according to the historical 

simulation method (value-at-risk). This makes it possible to compare the interest-rate 

risk arising from both the trading book and the banking book and also 

to present the results in aggregated form at Group level, with portfolio effects 

included. 

Stress tests in the 


Weekly averages, 

in 7 m 

RISK REPORT 73


Procedure for setting and monitoring limits 

Commerzbank has developed a comprehensive system of limits for restricting 

market risk. It is based on the already-specified risk ratios as well as on other factors 

such as sensitivity ratios for traded products. The market-risk limits are 

determined by the Board of Managing Directors or the Risk Committee. The 

global market-risk limits have been assigned to specific sub-portfolios within the 

respective trading units and may only be altered by means of a formal process 

for changing limits. 

The daily monitoring of market risk examines the risk figures that have been 

generated in order to ascertain the utilization of limits and possible breaches. 

The risk controllers responsible for the individual trading areas constantly 

monitor the open trading positions and the ensuing risk. Apart from monitoring 

the overall positions, ZRC also examines all proprietary-trading transactions to 

ensure that prices reflect market conditions in accordance with the MaH rules. 

Reporting for market risk 

Close cooperation between risk controllers at both the head-office and local 

levels ensures that decision makers on the Board of Managing Directors and at 

trading units are kept promptly informed. The local controllers report the risk 

figures that they have worked out to all decision makers within the trading units. 

At head office, these figures are collected and aggregated to form a Group risk 

figure. The Board of Managing Directors is informed daily – for one thing, by 

means of the so-called flash risk report, representing a preliminary form of information 

on the value-at-risk, and, for another, by the MaH report containing not 

only the risk figures but also the profit-and-loss data for all the relevant portfolio 

levels. In addition, all the market risks of the banking and trading books are 

included in the monthly risk report. 

In the year under review, the Commerzbank Group’s market-risk reporting 

was extended to cover the so-called market risk hot spots, which every second 

week present both the Risk Committee and the Board of Managing Directors with 

a detailed picture of the current exposure in the Group’s trading and banking 

books. In this connection, retroactively calculated data, such as the value-at-risk, 

are complemented by forward-looking forecast scenarios, in order to simulate 

their impact on current positions. 

In close coordination with their parent company, the mortgage banks affiliated 

with Commerzbank – Hypothekenbank in Essen and EEPK (Erste Europäische 

Pfandbrief- und Kommunalkreditbank) – and also other subsidiaries have 

established their own risk control. The risks arising at these subsidiaries are 

managed and controlled at the local level and the relevant data are made available 

without delay to Commerzbank’s central risk-control unit, which calculates 

and monitors the Group risk. 

3) Monitoring and controlling equity holding risk 

The monitoring of equity holding risk is performed by Risk Control, whereas the 

steering of such risks is handled by two different units of the Bank. Private equity 

business is coordinated by Securities (ZGS), while Strategy and Controlling 

(ZKE) is responsible for all the strategic and other equity holdings.

As far as new acquisitions of interests are concerned, the potential risks are 

analysed in advance by means of due diligence measures. However, alreadyexisting 

equity investments are steered on the basis of regular reports from the 

enterprises in question. In addition to these measures, the market risk stemming 

from the Bank’s listed equity investments, together with the risk from non-listed 

investments, is quantified – similarly to the calculation of trading positions –, 

monitored, and reported to the Board of Managing Directors by Risk Control. 

4) Monitoring and controlling liquidity risk 

Liquidity risk 

Group Treasury (ZGT) is responsible for managing liquidity risk. The task of 

liquidity management is to guarantee that Commerzbank is solvent at all times, 

not only under normal conditions but also in stress situations. ZGT prepares liquidity 

balances and makes cash-flow forecasts, which are subjected to constant 

examination in the course of the year. On the basis of these analyses, the future 

need for borrowed funds is worked out. The aim is to achieve efficient liquidity 

management by raising funds regularly and to cover the Bank against market 

fluctuations. The measures adopted by ZGT in this connection are geared closely 

to the Basel II proposals: 

ZGT pursues a policy of long-term matched maturities in financing; in other 

words, long-term credits are largely funded at long term. 

ZGT maintains substantial liquidity portfolios in the leading currency centres. 

Apart from eligible (commercial) credits and bills, the portfolios are made up 

exclusively of prime-quality securities, which may be pledged with central 

banks in order to raise short-term liquidity. At end-2003, the Bank had a liquidity 

reserve (unused security) of 721bn. 

In accordance with supervisory requirements (Principle II), an institution’s 

liquidity is deemed adequate if the weighted liquid assets available to it within 

30 days cover the weighted payment obligations callable during this period. In 

2003 (2002), the liquidity coefficient lay between 1.09 (1.13) and 1.18 (1.31) and 

was thus at all times well above the value of 1.0 required by the supervisory 

authorities. This shows that Commerzbank easily met the supervisory requirements 

for liquidity at all times. 

For internal steering purposes, ZGT regularly makes a projection of the 

development expected for Principle II over the next twelve months. This is based 

on information about planned trading activities, indications from foreign outlets 

and reports on the performance of customer-related business. 

At the same time, the structure of the balance sheet is analysed from the 

qualitative standpoint, applying the stable funding concept so that measures can 

be adopted in good time to deal with any gaps that are identified between stable 

assets and stable funding. 

RISK REPORT 75


Liquidity-risk measurement 

Last year, the liquidity-risk project initiated early in 2002 was successfully 

brought to a conclusion. The main objective of this project, run by ZRC in close 

cooperation with ZGT, was the daily calculation of the expected cash flow from 

all positions of the Parent Bank. Here, the expected payments are calculated 

under the assumption of both normal and – in terms of liquidity – “stressed” 

market conditions. Similarly on a daily basis, the assets are worked out that can 

readily be made liquid and are available for closing liquidity gaps. By means of 

these data and the key ratios established on their basis, ZGT will be put in a position 

to manage the Bank’s liquidity position even more efficiently (beyond the 

requirements of Principle II). At the same time, the implementation of this first 

stage of the project has already met the major requirements of Basel II with 

regard to the controlling of liquidity risk. 

A follow-up project planned for 2004 is intended to integrate further units 

such as the mortgage banks and asset management into the central calculation 

of liquidity risk in order to comply with the regulatory requirement of Basel II 

with regard to the monitoring of risk at Group level. 

Market-liquidity risk 

Commerzbank monitors market-liquidity risk with the aid of the liquidity VaR that 

is based on the results of historical simulation. This liquidity VaR is defined as 

the possible loss during the period in which a portfolio is being entirely liquidated 

in terms of risk, at a given level of probability (confidence level). Unlike the 

one-day VaR described in the section “Monitoring and controlling market risk”, 

it also takes into account the period needed to square the specific positions in 

terms of risk, which means to sell, cover or hedge them by means of the relevant 

transactions. 

In quantifying such risk, we take into consideration the market liquidity of the 

underlying transactions by means of portfolio-specific selling or squaring strategies. 

These strategies indicate the percentage of a portfolio which, if necessary, 

could be squared in terms of risk and in how many days. The selling strategies 

employed are regularly updated in consultations with the respective banking 

departments. 

5) Monitoring and controlling operational risk 

Operational risk management framework 

Last year, Commerzbank’s existing operational risk management framework was 

made more detailed through the addition of sets of rules, elaborated and firmly 

established. As a result, the Operational Risk Committee formed in 2002 and 

those responsible for the Bank’s individual organizational units performed their 

duties in terms of identifying, analysing, reporting and managing operational 

risk, in particular as regards the implementation of the Basel Committee’s 

“Sound practices for the management and supervision of operational risk” of 

February 2003.

Operational risk methods 

In order to calculate equity in accordance with Basel II by applying the Advanced 

Measurement Approach (AMA) in the future, we focused in the year under 

review on the main quantitative and qualitative methods for achieving this goal, 

taking account of the Basel requirements published to date. The structural collection 

of loss data – in line with Basel II – from operational risk was maintained 

and stepped up. Throughout the Group, all the losses stemming from operational 

risk that exceed 75,000 are systematically collected and centrally evaluated. 

The first findings were shared with and analysed by Operational Riskdata 

eXchange Association, Zurich (ORX). Through ORX, it is possible to exchange 

data both for the purpose of benchmarking with international participants and 

for modelling the risk or the need for capital. 

Furthermore, a pilot study in quality self-assessment was launched in individual 

areas of commercial banking and investment banking, for which methods 

and a system were worked out. This intranet-based tool integrated into the pool 

of loss data was used for the first time for investment-banking processes and 

will be extended to other areas of Commerzbank in 2004. This year, too, socalled 

key risk indicators are to be incorporated, which permit statements 

regarding the risk of future potential losses. 

The combination of loss data and qualitative information in an operationalrisk 

controlling system paves the way for the creation of operational-risk profiles 

for the individual business and service units. At the same time, mathematicalstatistical 

approaches to risk modelling have been refined on the basis of collected 

loss data and the technical conditions have been met for their integration 

into the Bank’s overall risk architecture. 

As some of the requirements have not yet been specified clearly in the 

Basel II consultative papers, we are also ensuring that it will be possible to 

implement the standardized approach or a planned so-called partial use – i.e. 

preparations are being made to use both the AMA and the standardized 

approach for various Group units. By participating in the relevant national and 

international bodies, Commerzbank is continuing to play an active role in the 

debate on such issues. 

Business contingency and continuity planning 

By means of regular self-assessments, the Bank creates for itself a standardized 

overview of the emergency measures for which the units subject to MaH assume 

responsibility. In addition, the Bank conducts numerous emergency tests in 

which, for example, the failure of the entire trading and service centre or individual 

locations or systems are simulated. For this purpose, business contingency 

managers have been appointed at the various units. 

Moreover, in a central business contingency policy the responsibilities of the 

diverse head-office departments and individual units are described. Starting in 

the year under review, these responsibilities are being adjusted to meet the 

requirements of the MaK and also the Sound Practices Paper. 

RISK REPORT 77


6) Monitoring and controlling business risk 

In line with their immediate responsibility for risk and earnings, the individual 

divisions and subsidiaries of the Bank also take charge of the operative management 

of business risks which occur in their area of activity. 

As part of the overall steering of the Bank, business risk was included last 

year for the first time in the calculation of economic capital. Business risk is 

worked out using an earnings-volatility model based on the historical monthly 

deviations of the actual from the planned result for fee income. As with the procedure 

applied for other types of risk, the calculation is based on a confidence 

level of 99.95% and a one-year time frame. 

7) Monitoring and controlling legal risk 

The management of the Commerzbank Group’s legal risk worldwide is entrusted 

to Legal Services (ZRA). The central function of ZRA is to recognize potential 

losses arising from legal risk at an early stage and to devise solutions for reducing, 

restricting or avoiding such risks. In this connection, ZRA produces guidelines 

and standard contracts for the entire Group, which are implemented in 

close cooperation with business lines, branches and subsidiaries. In addition to 

implementing and monitoring these uniform standards, ZRA advises all units of 

the Bank with regard to legal issues. The duties of ZRA also include informing 

the Board of Managing Directors and head-office departments about the impact 

of major legal changes and risks, as well as regularly adapting the Group’s 

guidelines and specimen contracts to new legal overall conditions. 

8) Monitoring and controlling strategic risk 

Responsibility for the strategic steering of Commerzbank lies with the Board of 

Managing Directors, with support in the case of strategic issues provided by 

Strategy and Controlling (ZKE). Some business-policy decisions also require the 

approval of the Supervisory Board. 

As strategic risk cannot be measured and controlled in quantitative terms, 

the management of such risk is subject to qualitative controlling. Constant 

observation of German and international competitors leads to an analysis of the 

major changes and developments, with conclusions being derived for the Bank’s 

strategic positioning. 

9) Monitoring and controlling reputational risk 

Reputational risk cannot be measured with the aid of quantitative methods 

either and it, too, is subject to qualitative controlling. As reputational risk may 

also primarily result from the wrong handling of other risk categories, the functioning 

and appropriateness of the risk-management system for all types of risk 

is important. In addition, Commerzbank avoids business-policy measures and 

transactions which entail extreme tax or legal risks, or violate business-policy 

principles published in either the articles of association or other declarations.

IV. Summary and outlook 

Commerzbank’s risk-management and risk-control system made an important 

contribution to the Bank’s overall result in 2003 as well. It is suited to identifying 

risks in good time which would endanger the Bank’s existence or impair its 

development and it is able to control such risks in a professional manner. 

The methods used to present and control risk were continually refined in the 

past business year, the focus being placed on credit risk and the integration of 

operational risk. The projects to implement the new supervisory provisions 

(Basel II, MaK) were maintained according to plan, with all the organizational 

MaK requirements now successfully implemented. Under the internal Basel II 

project, the ground has basically been prepared for the sophisticated IRB 

Advanced Approach to be applied as well as the advanced AMA approach (for 

operational risk). 

The management of credit risk from a single source with head-office and 

regional units and a professional intensive treatment section has proved its 

worth and – in addition to a marked reduction in credit volume and limits in 

some regions and sectors – has led to the loan portfolio being restructured to 

bring it into line with the credit-risk strategy. The Bank is confident that, thanks 

to its targeted risk-mitigation measures, it will be able to get its loan loss provisions 

down to under one billion euros. 

The further expansion of portfolio-management activities together with the 

integration of economic capital into the overall Bank management will be a main 

feature of risk-related activities in 2004; through an improved risk and returnoriented 

management of the Group, it will make a major contribution towards 

increasing shareholder value. 

In order to be able to guarantee Commerzbank’s core competency in risk 

management and controlling in the future as well, the Bank will continue to 

make every effort to maintain its high level in this area. Commerzbank believes 

that professional risk management and controlling represent a significant competitive 

edge. 

RISK REPORT 79

80 

financial statements in accordance with international 

accounting standards (ias) / international 

financial reporting standards (ifrs) for the 

commerzbank group as of december 31, 2003 

Income statement 83 

Basic earnings per share 84 

Balance sheet 85 

Statement of changes in equity 86 

Changes in minority interests 87 

Cash flow statement 88 

Notes 

Consolidated accounting principles 90 

Accounting and (1) Basic principles 90 

measurement methods (2) Changes in the method of disclosure 91 

(3) IAS, SIC and GASB rules applied 91 

(4) Consolidated companies 93 

(5) Principles of consolidation 94 

(6) Financial instruments: recognition and measurement (IAS 39) 95 

(7) Currency translation 97 

(8) Offsetting 97 

(9) Cash reserve 97 

(10) Claims 98 

(11) Provision for possible loan losses 98 

(12) Genuine repurchase agreements and securities-lending transactions 98 

(13) Positive fair values from derivative hedging instruments 98 

(14) Assets held for dealing purposes 99 

(15) Investments and securities portfolio 99 

(16) Intangible assets 99 

(17) Fixed assets 99 

(18) Leasing 

(19) Liabilities to banks and customers and also 

99 

Securitized liabilities 100 

(20) Negative fair values from derivative hedging instruments 100 

(21) Liabilities from dealing activities 100 

(22) Provisions for pensions and similar commitments 100 

(23) Other provisions 101 

(24) Taxes on income 101 

(25) Subordinated capital 102 

(26) Trust business 102 

(27) Treasury shares 102 

(28) Staff remuneration plans 102 

Expenses arising from special factors 104 

Major differences in accounting, measurement 

and consolidation methods: IAS/IFRS compared 

with HGB 105

Notes 

OVERVIEW 81 

Notes to the (29) Net interest income 107 

Income Statement (30) Provision for possible loan losses 107 

(31) Net commission income 108 

(32) Net result on hedge accounting 108 

(33) Trading profit 

(34) Net result on investments and securities portfolio 

108 

(available for sale) 109 

(35) Operating expenses 109 

(36) Other operating result 110 

(37) Regular amortization of goodwill 111 

(38) Expenses arising from special factors 111 

(39) Restructuring expenses 111 

(40) Taxes on income 112 

(41) Basic earnings per share 113 

(42) Cost/income ratio 113 

(43) Segment reporting 114 

Notes to the Assets (44) Cash reserve 123 

Balance Sheet (45) Claims on banks 123 

(46) Claims on customers 

(47) Claims on and liabilities to subsidiaries and 

123 

equity investments 124 

(48) Total lending 124 

(49) Provision for possible loan losses 125 

(50) Positive fair values from derivative hedging instruments 127 

(51) Assets held for dealing purposes 127 

(52) Investments and securities portfolio 128 

(53) Intangible assets 129 

(54) Fixed assets 129 

(55) Changes in book value of fixed assets and investments 130 

(56) Tax assets 131 

(57) Other assets 131 

Liabilities (58) Liabilities to banks 132 

(59) Liabilities to customers 132 

(60) Securitized liabilities 133 

(61) Negative fair values from derivative hedging instruments 134 

(62) Liabilities from dealing activities 135 

(63) Provisions 135 

(64) Tax liabilities 137 

(65) Other liabilities 137 

(66) Subordinated capital 138 

(67) Hybrid capital 139 

(68) Equity structure 140 

(69) Conditional capital 142 

(70) Authorized capital 143 

(71) The Bank’s foreign-currency position 144

82 OVERVIEW 

Notes 

Notes to (72) Derivative transactions 145 

financial instruments (73) Market risk arising from trading activities 148 

(74) Interest-rate risk 149 

(75) Concentration of credit risk 150 

(76) Assets pledged as security 151 

(77) Maturities, by remaining lifetime 152 

(78) Fair value of financial instruments 153 

Other notes (79) Subordinated assets 154 

(80) Off-balance-sheet commitments 154 

(81) Volume of managed funds 155 

(82) Genuine repurchase agreements 156 

(83) Securities-lending transactions 156 

(84) Trust transactions at third-party risk 

(85) Risk-weighted assets and capital ratios as 

157 

defined by the Basel Capital Accord (BIS) 157 

(86) Liquidity ratio of Commerzbank AG (Principle II) 159 

(87) Securitization of credits 

(88) Average number of staff employed by the Bank 

160 

during the year 161 

(89) Remuneration and loans to board members 161 

(90) Other commitments 163 

(91) Letter of comfort 164 

(92) Corporate Governance Code 165 

Boards of Commerzbank Aktiengesellschaft 166 

Holdings in consolidated companies 167 

Group auditors’ report 172

income statement 

1.1.–31.12.2003 1.1.–31.12.2002 Change 

Notes 7 m 7 m in % 

Interest received 11,767 18,032 –34.7 

Interest paid 8,991 14,899 –39.7 

Net interest income (29) 2,776 3,133 –11.4 

Provision for possible loan losses (11, 30, 49) –1,084 –1,321 –17.9 

Net interest income after provisioning 1,692 1,812 –6.6 

Commissions received 2,505 2,416 3.7 

Commissions paid 369 296 24.7 

Net commission income (31) 2,136 2,120 0.8 

Net result on hedge accounting (32) 40 –56 • 


Net result on investments and 

(33) 737 544 35.5 

securities portfolio (available for sale) (34) 291 –11 • 

Operating expenses (35) 4,511 5,155 –12.5 

Other operating result (36) 174 938 –81.4 

Operating profit 559 192 • 




(37) 110 108 1.9 

and restructuring expenses 449 84 • 

Expenses arising from special factors (38) 2,325 247 • 




(39) 104 209 –50.2 

and restructuring expenses –1,980 –372 • 

Extraordinary profit – – – 

Pre-tax profit –1,980 –372 • 

Taxes on income (40) 249 –103 • 

After-tax profit –2,229 –269 • 

Profit/loss attributable 

to minority interests –91 –29 • 

Net loss (41) –2,320 –298 • 

83

84 INCOME STATEMENT 

Appropriation of profit 2003 2002 Change 

7 m 7 m in % 

Net loss –2,320 –298 • 

Transfer from capital reserve/retained earnings 2,320 352 • 

Consolidated loss/profit 0 54 • 

Commerzbank Aktiengesellschaft did not achieve a distributable profit in the 2003 financial year. As a result, no dividend 

will be paid. 

Basic earnings per share 2003 2002 Change 

Notes 7 7 in % 

Loss per share (41) –4.26 –0.56 • 

The calculation of the loss per share according to IAS is based on the net loss, with minority interests not taken into consideration. 

The diluted loss per share is identical to the loss per share, since – as in the previous year – no conversion or 

option rights were outstanding on the balance-sheet date and consequently there was no dilution effect.

alance sheet 

Assets 31.12.2003 31.12.2002 Change 


Cash reserve (9, 44) 7,429 8,466 –12.2 

Claims on banks (10, 45, 47, 48) 51,657 54,343 –4.9 

Claims on customers (10, 46, 47, 48) 138,438 148,514 –6.8 

Provision for possible loan losses 

Positive fair values from 

(11, 49) –5,510 –5,376 2.5 

derivative hedging instruments (13, 50) 2,552 3,131 –18.5 

Assets held for dealing purposes (14, 51) 87,628 117,192 –25.2 

Investments and securities portfolio (15, 48, 52, 55) 87,842 84,558 3.9 

Intangible assets (16, 53, 55) 802 1,151 –30.3 

Fixed assets (17, 18, 54, 55) 2,063 2,505 –17.6 

Tax assets (24, 56) 6,038 5,995 0.7 

Other assets (57) 2,646 1,655 59.9 

Total 381,585 422,134 –9.6 

Liabilities and equity 31.12.2003 31.12.2002 Change 


Liabilities to banks (19, 47, 58) 95,249 114,984 –17.2 

Liabilities to customers (19, 47, 59) 100,000 95,700 4.5 

Securitized liabilities 

Negative fair values from 

(19, 60) 83,992 92,732 –9.4 

derivative hedging instruments (20, 61) 5,932 5,696 4.1 

Liabilities from dealing activities (21, 62) 67,014 83,238 –19.5 

Provisions (22, 23, 63) 3,307 3,528 –6.3 

Tax liabilities (24, 64) 4,495 3,664 22.7 

Other liabilities (65) 2,911 3,285 –11.4 

Subordinated capital (25, 66) 8,381 9,237 –9.3 

Minority interests 1,213 1,262 –3.9 

Equity (27, 68, 69, 70) 9,091 8,808 3.2 

Subscribed capital (68) 1,545 1,378 12.1 

Capital reserve (68) 4,475 6,131 –27.0 

Retained earnings (68) 3,286 3,268 0.6 

Revaluation reserve (15, 68) 1,240 –769 • 

Measurement of cash flow hedges (6, 68) –1,236 –1,248 1.0 

Reserve from currency translation (7, 68) –219 –6 • 

Consolidated loss/profit 0 54 • 

Total 381,585 422,134 –9.6 

85

86 

statement of changes in equity 

Sub- Capital Retained Reval- Valuation Reserve Consoli- Total 

scribed reserve earnings uation of from dated 

capital reserve cash flow currency profit 

7 m hedges translation 

Equity 

as of 1.1.2003 1,378 6,131 3,268 –769 –1,248 –6 54 8,808 

Capital increase 

Issue of shares 

139 603 742 

to employees 

Transfer from 

6 8 14 

capital reserve –2,320 –2,320 

Dividend payment 

Net changes in 

–54 –54 

revaluation reserve 

Net changes arising 

2,009 2,009 

from cash flow hedges 12 12 

Changes in treasury shares 

Changes in companies 

included in consolidation 

22 53 75 

and other changes 

Equity 

18 – – –213 –195 

as of 31.12.2003 1,545 4,475 3,286 1,240 –1,236 –219 0 9,091 

As of December 31, 2003, the subscribed capital of 

Commerzbank Aktiengesellschaft stood at 71,554m pursuant 

to the Bank’s articles of association; it is divided 

into 597,858,005 no-par-value shares (notional value per 

share: 72.60). After the 3,489,912 treasury shares held by 

the Bank on December 31, 2003, are deducted, its subscribed 

capital amounts to 71,545m. 

The Bank made use of the authorization resolved by 

the Annual General Meeting of May 30, 2003 to purchase 

its own shares for the purpose of securities trading, 

pursuant to Art. 71, (1), no. 7, German Stock Corporation 

Act – AktG. Gains and losses from trading in the Bank’s 

own shares do not appear in the income statement. 

No use was made in the 2003 financial year of the resolution 

of the Annual General Meeting of May 30, 2003, 

authorizing the Bank to repurchase its own shares pursuant 

to Art. 71, (1), no. 8, AktG, for purposes other than 

securities trading. 

Other changes in retained earnings relate to changes 

in equity at associated companies which, in accordance 

with IAS 28, have to be shown on a pro-rata basis with no 

effect on the net profit.

Changes in minority interests 

STATEMENT OF CHANGES IN EQUITY 87 

Minority Reval- Valuation Reserve Gains/ Total 

interests uation of from losses 

reserve cash flow currency 

7 m hedges translation 

Minority interests 

as of 1.1.2003 1,043 334 –132 –12 29 1,262 

Capital increases 

Allocation of profit/ 

offsetting of loss from 

17 17 

net result for the year 

Takeover of minority 

–21 21 0 

interests by the Group –85 2 –5 –88 

Distributions –50 –50 

Profits/losses 2003 

Net changes in 

91 91 

revaluation reserve 

Net changes arising 

–23 –23 

from cash flow hedges 

Changes in companies 

included in consolidation 

9 9 

and other changes 

Minority interests 

24 –29 – –5 

as of 31.12.2003 978 313 –123 –46 91 1,213 

The takeover of minority interests related to the increase in our shareholding in BRE Bank from 50.0% to 72.16%.

88 

cash flow statement 

2003 2002 

7 m 7 m 

Net profit 

Non-cash positions in net profit and adjustments to reconcile 

net profit with net cash provided by operating activities: 

Write-downs, depreciation, adjustments, write-ups to fixed 

and other assets, changes in provisions and net changes 

–2,320 –298 

due to hedge accounting 

Change in other non-cash positions: 

Positive and negative fair values from derivative 

929 1,114 

financial instruments (trading and hedging derivatives) 1,248 1,607 

Profit from the sale of assets –291 88 

Profit from the sale of fixed assets 4 –12 

Other adjustments (mainly net interest income) –2,299 –4,000 

Sub-total 

Change in assets and liabilities from operating activities 

after correction for non-cash components: 

–2,729 –1,501 

Claims on banks 2,686 9,049 

Claims on customers 10,076 71,801 

Securities held for dealing purposes 12,519 13,424 

Other assets from operating activities –2,603 2,604 

Liabilities to banks –19,735 5,898 

Liabilities to customers 4,300 –20,698 

Securitized liabilities –8,740 –97,938 

Other liabilities from operating activities 4,272 –3,102 

Interest and dividends received 11,767 18,032 

Interest paid –8,991 –14,899 

Income tax paid –145 –201 

Net cash provided by operating activities 

Proceeds from the sale of: 

2,677 –17,531 

Investments and securities portfolio 48,593 65,905 

Fixed assets 

Payments for the acquisition of: 

424 1,955 

Investments and securities portfolio –52,351 –47,039 

Fixed assets 

Effects of changes in the group of companies included in the consolidation 

–317 –738 

Payments from the acquisition of subsidiaries 68 –238 

Net cash used by investing activities –3,583 19,845 

Proceeds from capital increases 831 –82 

Dividends paid –54 –217 

Other financing activities –856 –1,287 

Net cash provided by financing activities –79 –1,586 

Cash and cash equivalents at end of previous period 8,466 7,632 

Net cash provided by operating activities 2,677 –17,531 

Net cash used by investing activities –3,583 19,845 

Net cash provided by financing activities –79 –1,586 

Effects of exchange-rate changes on cash and cash equivalents –52 106 

Cash and cash equivalents at end of period 7,429 8,466

The cash flow statement shows the structure of and 

changes in cash and cash equivalents during the financial 

year. It is broken down into operating activities, 

investing activities and financing activities. 

Under net cash provided by operating activities, payments 

(inflows and outflows) from claims on banks and 

customers and also securities from the trading portfolio 

and other assets are shown. Additions to and disposals 

from liabilities to banks and customers, securitized 

liabilities and other liabilities also belong to operating 

activities. The interest and dividend payments resulting 

from operating activities are similarly reflected in the net 

cash provided by operating activities. 

The net cash used by investing activities shows payments 

for the investments and securities portfolio as 

well as for fixed assets and payments for the acquisition 

of subsidiaries. The effects of changes in the list of consolidated 

companies are also recognized under this item. 

CASH FLOW STATEMENT 89 

The net cash provided by financing activities covers 

the proceeds from capital increases as well as payments 

received and made with regard to subordinated capital. 

Distributed dividends are also shown here. 

We consider cash and cash equivalents to be the 

Cash reserve, consisting of cash on hand, balances held 

at central banks and also debt issued by public-sector 

borrowers and bills of exchange eligible for rediscounting 

at central banks. Claims on banks which are due on 

demand are not included. 

As far as banks are concerned, the cash flow statement 

can be considered not very informative. For us, the 

cash flow statement replaces neither liquidity planning 

nor financial planning, nor do we look upon it as a steering 

instrument.

90 

notes 

Consolidated accounting principles 

The Commerzbank Group’s financial statements as of 

December 31, 2003 were prepared in accordance with the 

directives 83/349/EEC (directive on consolidated financial 

statements) and 86/635/EEC (directive on annual accounts 

of banks) on the basis of the International Accounting 

Standards (IASs) – in future: International Financial Reporting 

Standards (IFRS) – approved and published by the 

International Accounting Standards Board (IASB) and 

with their interpretation by the Standing Interpretations 

Committee (SIC), or International Financial Reporting 

Interpretation Committee (IFRIC). A summary of the regulations 

that have been applied can be found on pages 

91-92. The necessary compliance with the directive on 

the annual accounts of banks was achieved through the 

appropriate structuring of the items balance sheet, 

income statement and the notes. Pursuant to Art. 292a, 

German Commercial Code (HGB), these consolidated 

financial statements prepared in accordance with IAS 

Accounting and measurement methods 

(1) Basic principles 

The consolidated financial statements are based on the 

going concern principle. Income and expenses are recognized 

on a pro-rata temporis basis; they are shown for the 

period to which they may be assigned in economic terms. 

As in previous years, we applied IAS 39 (2000), 

together with the different classification and measurement 

principles prescribed by this standard, in our accounting 

in the 2003 financial year. In order to reflect the 

different rules of this standard, financial assets and financial 

liabilities have been assigned to the following categories: 

exempt the Bank from the need to prepare financial statements 

according to German accounting principles. We 

have presented the main differences between IAS financial 

statements and those prepared in accordance with 

German accounting rules on pages 105-106 of this report. 

The consolidated financial statements also reflect the 

standards approved by the German Accounting Standards 

Board (GASB) and published by the German Federal 

Ministry of Justice pursuant to Art. 342, (2), HGB. 

In addition to the consolidated balance sheet and the 

consolidated income statement, the consolidated financial 

statements also include a statement of changes in 

equity and in minority interests, a cash flow statement 

and the notes. Segment reporting appears in the notes on 

pages 114-122. 

The separate report on the risks related to future 

developments (Risk report pursuant to Art. 315, (1), HGB) 

appears on pages 52-79. 

Unless otherwise indicated, all the amounts are 

shown in millions of euros. 

1. Loans and claims originated by the Bank. 

2. Financial assets held to maturity. 

3. Financial assets held for trading (Assets held for dealing 

purposes) and certain financial liabilities (Liabilities 

from dealing activities). 

4. Available-for-sale financial assets. 

5. Other financial liabilities. 

The detailed rules for hedge accounting are applied in 

the case of derivative hedging instruments (further details 

may be found in note 6). 

All the companies included in the consolidation prepared 

their financial statements as of December 31, 2003. 

Uniform accounting and measurement methods are 

applied throughout the Commerzbank Group in preparing 

the financial statements.

(2) Changes in the method of disclosure 

In the past financial year, we maintained the recognition, 

measurement and disclosure methods in accordance with 

the F39 IAS/IFRS framework. This had no effect on the recognition 

and measurement methods of previous periods. 

(3) IAS, SIC and GASB rules applied 

There is regularly a time gap between the approval of an 

IAS, or a related interpretation, and its effective date. As a 

rule, however, the IASB recommends the early application 

of not yet effective, but already approved, standards and 

interpretations. 

NOTES 91 

Within the Commerzbank Group, as a matter of principle 

we base our accounting and measurement on all the 

IASs approved and published by December 31, 2003. The 

exceptions were the changes to various standards initiated 

by the improvement project as well as the first 

amendments to IAS 32 and 39 published by the IASB on 

December 17, 2003, which have to be applied in the 2005 

financial year at the latest. 

The 2003 consolidated financial statements are based on the IASC framework and the following IASs which are relevant 

for the Commerzbank Group: 

IAS 1 Presentation of financial statements 

IAS 7 Cash flow statements 

IAS 8 Net profit or loss for the period, fundamental errors and changes in accounting policies 

IAS 10 Events after the balance-sheet date 

IAS 12 Income taxes 

IAS 14 Segment reporting 

IAS 16 Property, plant and equipment 

IAS 17 Leases 

IAS 18 Revenue 

IAS 19 Employee benefits 

IAS 21 The effects of changes in foreign-exchange rates 

IAS 22 Business combinations 

IAS 23 Borrowing costs 

IAS 24 Related party disclosures 

IAS 27 Consolidated financial statements and accounting for investments in subsidiaries 

IAS 28 Accounting for investments in associates 

IAS 30 Disclosures in the financial statements of banks and similar financial institutions 

IAS 31 Financial reporting of interests in joint ventures 

IAS 32 Financial instruments: disclosure and presentation 

IAS 33 Earnings per share 

IAS 36 Impairment of assets 

IAS 37 Provisions, contingent liabilities and contingent assets 

IAS 38 Intangible assets 

IAS 39 Financial instruments: recognition and measurement 

IAS 40 Investment property 

We have not applied IFRS 1 and IAS 2, 11, 15, 20, 26, 29, 34, 

35 and 41, as they are either not relevant for our institution 

or did not have to be applied in the consolidated financial 

statements. 

For IAS 40, recognition is made at cost, as is permitted 

under this rule.

92 NOTES 

In addition to the standards mentioned, we have also taken into consideration in our consolidated financial statements 

the following interpretations of SIC or IFRIC that are relevant for us: 

relates to 

SIC-2 Consistency – capitalization of borrowing costs IAS 23 

SIC-3 Elimination of unrealized profits and losses on transactions with associates IAS 28 

SIC-5 Classification of financial instruments – contingent settlement provisions IAS 32 

SIC-6 Costs of modifying existing software IASC framework 

SIC-7 Introduction of the euro IAS 21 

SIC-9 Business combinations – classification either as acquisitions or unitings of interests IAS 22 

SIC-12 Consolidation – special-purpose entities IAS 27 

SIC-15 Operating leases – incentives IAS 17 

SIC-16 Share capital – reacquired own equity instruments (treasury shares) IAS 32 

SIC-17 Equity – costs of an equity transaction IAS 32 

SIC-18 Consistency – alternative methods IAS 1 

SIC-20 Equity accounting method – recognition of losses IAS 28 

SIC-21 Income taxes – recovery of revalued non-depreciable assets IAS 12 

SIC-24 Earnings per share – financial instruments and 

other contracts that may be settled in shares 

IAS 33 

SIC-25 Income taxes – changes in the tax status of an enterprise or its shareholders IAS 12 

SIC-27 Evaluating the substance of transactions in the legal form of a lease IAS 1, 17, 18 

SIC-28 Business combinations – “date of exchange” and 

fair value of equity instruments 

IAS 22 

SIC-30 Reporting currency – translation from measurement currency 

to presentation currency 

IAS 21, 29 

SIC-32 Intangible assets – web site costs IAS 38 

SIC-33 Consolidation and equity method – potential voting rights and 

allocation of ownership interests 

IAS 27, 28, 39 

The SIC, or IFRIC, interpretations 1, 10, 11, 13, 14, 19, 22, 23, 29 and 31 were irrelevant for our consolidated financial 

statements and did not, therefore, have to be taken into consideration.

Furthermore, in the present consolidated financial statements, 

the following German Accounting Standards 

(GAS) have been taken into consideration, which had 

to be applied and had been approved by the German 

(4) Consolidated companies 

The consolidated financial statements include in addition 

to the Parent Bank 102 subsidiaries (95 in 2002), in which 

Commerzbank AG holds more than 50% of the capital 

directly or indirectly, or exerts control over them. Of these, 

45 have their legal seat in Germany (44 in 2002) and 57 

(51 in 2002) elsewhere. 

156 subsidiaries and associated companies (167 in 

2002) of minor significance for the Group’s asset and 

financial position and earnings performance have not 

been included; instead, they have been shown under 

Investments and securities portfolio as holdings in subsidiaries 

or investments. These companies account for 

less than 0.1% (0.2% in 2002) of the Group’s overall balance-sheet 

total. 

The Commerzbank Group has three sub-groups: 

● CommerzLeasing und Immobilien AG, Düsseldorf 

● Jupiter International Group plc, London 

● comdirect bank AG, Quickborn 

which have presented sub-group financial statements. 

NOTES 93 

Accounting Standards Board (GASB) and announced by 

the German Federal Ministry of Justice up to December 

31, 2003, in accordance with Art. 342, (2), HGB: 

GAS 1 Exempting consolidated financial statements in accordance with §292a, HGB 

GAS 1a Exempting consolidated financial statements in accordance with §292a, HGB 

– goodwill and other non-current intangible assets 

GAS 2 Cash flow statements 

GAS 2-10 Cash flow statements of financial institutions 

GAS 3 Segment reporting 

GAS 3-10 Segment reporting of banks 

GAS 4 Purchase accounting in consolidated financial statements 

GAS 5 Risk reporting 

GAS 5-10 Risk reporting by financial enterprises 

GAS 7 Presenting equity in consolidated financial statements 

GAS 8 Accounting for investments in associates 

GAS 9 Financial reporting of interests in joint ventures 

GAS 10 Deferred taxes and consolidated financial statements 

GAS 11 Related-party disclosure 

GAS 12 Non-current intangible assets 

GAS 13 Consistency principle and correction of errors 

The following 15 subsidiaries – four of them based in 

Germany – were included in the consolidation for the first 

time in 2003: 

● ATBRECOM Limited, London 

● CCR Actions, Paris 

● CCR Chevrillon-Philippe, Paris 

● CCR Gestion Internationale, Paris 

● comdirect private finance AG, Quickborn 

● Commerz Advisory Management Co. Ltd., 

British Virgin Islands 

● CORECD Commerz Real Estate Consulting and 

Development GmbH, Berlin 

● Hansa Automobil Leasing GmbH, Hamburg 

● Intermarket Bank AG, Vienna 

● Lanesborough Limited, Bermuda 

● NALF Holdings Limited, Bermuda 

● RHEINHYP-BRE Bank Hipoteczny SA, Warsaw 

● Service-Center Inkasso GmbH Düsseldorf, Düsseldorf 

● The New Asian Property Fund Limited, Bermuda 

● Transfinance a.s., Prague

94 NOTES 

In addition to the 102 (95 in 2002) subsidiaries, we 

included in the 2003 financial year the following four 

(2002: two) special-purpose entities and 13 (2002: 13) nonpublicly-offered 

funds in our consolidated financial statements 

in accordance with IAS 27 and SIC-12, or IFRIC 12. 

Comas Strategy Fund 1 Limited, Grand Cayman, and 

Plymouth Capital Limited, St. Helier/Jersey, were included 

as special-purpose entities for the first time. 

The inclusion of these special-purpose entities has no 

major effects on the presentation of the Group’s asset and 

financial position or earnings performance. 

The following companies have been removed from 

the list of consolidated companies: 

● ALTINUM Grundstücks-Vermietungsgesellschaft 

mbH & Co. Objekt Sonninhof KG i.L., Düsseldorf 

● CFM Commerz Finanz Management GmbH, 

Frankfurt am Main 

● Commerzbank Asset Management Italia S.p.A., Rome 

● Commerzbank International (Ireland), Dublin 

● Commerzbank Società di Gestione del Risparmio 

S.p.A., Rome 

● Commerzbank U.S. Finance, Inc., 

Wilmington/Delaware 

● Molegra Grundstücks-Vermietungsgesellschaft mbH 

& Co. Objekt Projektentwicklungs KG, Düsseldorf 

● TI Limited i.L., Bermuda 

Eleven major associated companies (16 in 2002) 

– eight of them based in Germany (2002: eight) – are measured 

using the equity method. As a major associated 

company, our equity holding in Eurohypo Aktiengesellschaft, 

Frankfurt am Main, is included in the consolidated 

financial statements, as it was in the previous year. For 

the first time, ComSystems GmbH, Düsseldorf, appears at 

equity. 

The following companies have been removed from 

the list of associated companies: 

● Clearing Bank Hannover Aktiengesellschaft i.L., 

Hanover 

● Hispano Commerzbank (Gibraltar) Ltd., Gibraltar 

● Korea Exchange Bank (KEB), Seoul 

● RHEINHYP-BRE Bank Hipoteczny SA, Warsaw 

● The New Asian Land Fund Limited, Bermuda 

● The New Asian Property Fund Limited, Bermuda 

In the fourth quarter of 2003, we sold 26.2m KEB 

shares, representing a stake of 7.1%, to a foreign investor. 

At the same time, KEB effected a capital increase, in which 

we did not participate. Due to these measures, our interest 

in KEB was reduced from 32.6% to 14.8%. Once these 

transactions had been concluded, we changed the 

accounting for this equity holding from the at equity 

method to the fair value approach. This has no major 

effects on our asset and financial position or on earnings 

performance. 

Commerz Net Business AG, Frankfurt am Main, was 

renamed Commerz Business Consulting AG, Frankfurt am 

Main, and NIV Vermögensverwaltungsgesellschaft mbH, 

Frankfurt am Main, was renamed Commerz Immobilien 

und Vermögensverwaltungsgesellschaft mbH, Frankfurt 

am Main. Both companies remain fully consolidated. 

RHEINHYP-BRE Bank Hipoteczny SA, Warsaw, and The 

New Asian Property Fund Limited, Bermuda, have been 

fully consolidated since December 31, 2003. 

A complete list of the subsidiaries, associated companies 

and special-purpose entities and non-publiclyoffered 

funds included in our consolidated financial statements 

can be found on pages 167-170. 

(5) Principles of consolidation 

The consolidation of the capital accounts is based on the 

book-value method, whereby the historical cost of the 

holding in the subsidiary is set off against the share of the 

equity that was acquired at that time. As far as possible, 

any residual differences in amount are assigned to 

the subsidiary’s assets and liabilities, reflecting the percentage 

share of equity held. If any positive differences 

remain after such assignment, these are shown as goodwill 

under Intangible assets in the balance sheet and are 

depreciated to reflect their probable useful economic lives 

over a period of 15 years, using the straight-line method. 

Claims and liabilities deriving from business relations 

between Group companies, as well as expenses and 

income, are eliminated as part of the consolidation of 

earnings; intra-Group book gains or losses registered 

during the financial year are eliminated unless they are of 

minor importance. 

Associated companies are measured according to the 

equity method and are shown as investments in associated 

companies under Investments and securities portfolio. 

The purchase cost of these investments and the 

goodwill are determined at the time of their first inclusion 

in the consolidated financial statements, applying the 

same rules as for subsidiaries. The equity book value

which is carried and either appears or does not appear in 

the income statement is based on the financial statements 

of associated companies that are prepared in accordance 

with local accounting rules or on auxiliary calculations 

in accordance with IAS/IFRS rules by the associated company. 

Holdings in subsidiaries not consolidated because of 

their marginal significance and investments are shown at 

their fair value, or if this cannot be reliably established, at 

cost under Investments and securities portfolio. 

(6) Financial instruments: recognition and measurement 

(IAS 39) 

In accordance with IAS 39, all financial assets and liabilities 

– which also includes derivative financial instruments 

– have to be shown in the balance sheet. For this 

purpose, the entire portfolio has to be broken down into 

various groups and measured in accordance with the 

respective classification. 

The following remarks present an overview of how 

we have applied the rules of this standard within the 

Commerzbank Group: 

a) Categorization of financial assets and liabilities and 

their measurement 

● Loans and claims originated by the Bank: 

Loans granted directly to the borrower and claims due 

directly from the borrower are assigned to this category. 

They are measured at amortized cost. Premiums 

and discounts appear under Net interest income over 

the entire lifetime. 

● Held-to-maturity financial assets: 

Non-derivative financial assets with a fixed maturity 

may be included in this category if they cannot be 

assigned to the ”Loans and claims originated by the 

Bank” category and if both the intent and the ability 

exist to hold them to final maturity. They are measured 

at amortized cost, with premiums and discounts being 

recognized over the entire lifetime to maturity. The 

Commerzbank Group has not used the ”Held-to-maturity 

financial assets” category with respect to the 2003 

financial year either. 

NOTES 95 

● Assets held for dealing purposes and Liabilities from 

dealing activities: 

All financial assets which are held for dealing purposes 

are assigned to this class. These include original 

financial instruments (especially interest-bearing 

securities, equities and promissory notes), precious 

metals and derivative financial instruments with a 

positive fair value. 

All financial liabilities from dealing activities are 

assigned to this class. These include derivative financial 

instruments insofar as they have a negative fair 

value and delivery obligations arising from short sales 

of securities. 

In accordance with IAS 39, derivative financial 

instruments are classified as part of the trading portfolio 

insofar as they do not qualify as hedging derivatives 

used in hedge accounting. 

Assets held for dealing purposes and liabilities 

from dealing activities are measured at their fair value 

on the balance-sheet date. Measurement gains and 

losses appear under Trading profit in the income statement. 

● Available-for-sale financial assets: 

All non-derivative financial assets not covered by one 

of the above classes are assigned to this category. Primarily, 

these are interest-bearing securities, equities, 

promissory notes and investments. This group is also 

referred to as the Available-for-sale portfolio. 

They are initially measured at cost and subsequently 

at their fair value. After deferred taxes have 

been taken into consideration, measured gains and 

losses are recognized with no effect on the income 

statement in a separate equity item (revaluation 

reserve). If the financial asset is sold, the cumulative 

valuation previously recognized in the revaluation 

reserve is released and shown in the income statement. 

Should the asset’s value be permanently 

impaired, the revaluation reserve has to be reduced by 

the amount of the impairment, and this amount has to 

be reflected in the income statement. If the fair value 

cannot be reliably ascertained, measurement is made 

at amortized cost. Premiums and discounts are recognized 

under Net interest income over the entire lifetime.

96 NOTES 

● Other financial liabilities: 

These include all original financial liabilities, especially 

liabilities to banks and customers and also securitized 

liabilities. Measurement is made at amortized 

cost. Premiums and discounts are recognized under 

interest income over the entire lifetime. 

b) Embedded derivatives 

IAS 39 also regulates the treatment of embedded 

derivatives. These are derivatives which are part of 

an original financial instrument and are inseparably 

linked to it. Such financial instruments are also 

referred to as hybrid financial instruments in IAS 39. 

Hybrid financial instruments include reverse convertible 

bonds (bonds whose repayment may take the 

form of equities) or bonds with indexed interest payments. 

In accordance with IAS 39, the embedded 

derivative should be separated from the original host 

contract under certain conditions and accounted for 

and measured separately at fair value as a stand-alone 

derivative. Such separation has to be made if the characteristics 

and risks of the embedded derivative are 

not closely related to those of the host contract. In this 

case, the embedded derivative has to be regarded as 

part of the trading portfolio and recognized at its fair 

value. Changes in the fair value have to be shown in 

the income statement. The host contract is accounted 

for and measured applying the rules of the relevant 

category of the financial instrument. However, if the 

characteristics and risks of the embedded derivative 

are closely linked to those of the host contract, the 

embedded derivative is not separated from the latter 

and the hybrid financial instrument is measured in 

accordance with the general provisions. 

c) Hedge accounting 

IAS 39 entails extensive and quite complicated regulations 

concerning accounting for hedging instruments, 

which are superimposed upon the general accounting 

rules for derivatives described above and also for 

secured, underlying transactions. In line with general 

regulations, derivatives are classified as trading transactions 

(assets held for dealing purposes or liabilities 

from dealing activities) and are measured at their fair 

value. The result of such measurement is shown in the 

income statement under Trading profit. 

If derivatives are used to hedge risks from nontrading 

transactions, IAS 39 permits, under certain 

conditions, the application of special regulations in 

hedge accounting. For the most part, two forms of 

hedge accounting are distinguished: 

● Fair value hedge accounting: 

For derivatives which serve to hedge the fair value 

of recognized assets or liabilities (so-called fair value 

hedges), IAS 39 prescribes the use of fair value hedge 

accounting. The risk of a change in fair value exists 

above all for loans, securities and liabilities with a 

fixed interest rate. 

In line with the regulations for fair value hedge 

accounting, the hedging derivative is shown at fair 

value, with changes in its fair value appearing in the 

income statement. Any changes in the fair value of the 

hedged asset or hedged liability resulting from the 

hedged risk also have to be recognized in the income 

statement. Given a perfect hedge, the changes in 

measurement recognized in the income statement for 

the hedge and the hedged transaction will largely balance 

one another. 

If the asset or liability is recognized at amortized 

cost according to the general regulations (e.g. an extended 

loan or an outstanding bond), the book value 

has to be adjusted for the accumulated changes in fair 

value resulting from the hedged risk. However, if the 

asset is recognized at fair value (e.g. an available-forsale 

security), the changes in fair value resulting from 

the hedged risk have to be recognized, contrary to the 

general rule, in the income statement. 

● Cash flow hedge accounting: 

For derivatives which serve to hedge future cash flows 

(cash flow hedges), IAS 39 prescribes the use of cash 

flow hedge accounting. A risk relating to the size of 

future cash flows exists in particular for floating-interest-rate 

loans, securities and liabilities as well as 

forecasted transactions (e.g. forecasted fund-raising 

or financial investments). At the same time, IAS 39 

also prescribes the application of cash flow hedge 

accounting rules for the hedging of future cash flows 

from pending business. 

Derivative financial instruments used in cash flow 

hedge accounting are carried at fair value. Reporting of 

the gain or loss has to be divided into an effective and 

an ineffective part. The effective portion is that which 

represents an effective hedge of the cash flow risk.

After deferred taxes have been taken into consideration, 

this is recognized directly in a separate item 

under equity (Measurement of cash flow hedges). By 

contrast, the ineffective portion is shown in the income 

statement. For the underlying transactions of 

cash flow hedges, there is no change in the general 

accounting rules described above. 

The application of hedge accounting rules is tied to 

a number of additional conditions. These relate above 

all to the documentation of the hedge and also to its 

effectiveness. 

The hedge has to be documented at the time of 

its conclusion. Documentation extends above all to 

an identification of the hedging derivative and the 

hedged transaction and also details of the hedged risk 

and the method employed to determine the effectiveness 

of the hedge. Documentation for a transaction 

hedged with a derivative may relate to either an individual 

asset, liability, pending business or forecasted 

transaction or to a portfolio of such items which are 

given similar accounting treatment. However, it is not 

sufficient to document a net risk position to be hedged. 

In addition to such disclosure, IAS 39 calls for 

evidence of an effective hedge for the application of 

hedge accounting rules. Effectiveness in this connection 

means the relationship between the change in fair 

value or the cash flow resulting from the hedged 

underlying transaction and the change in fair value 

or the cash flow resulting from the hedge. If these 

changes almost entirely balance one another, a high 

degree of effectiveness exists. Proof of effectiveness 

requires, on the one hand, that a high degree of effectiveness 

can be expected from a hedging relationship 

in the future (prospective effectiveness). On the other 

hand, when a hedging relationship exists, it must be 

regularly demonstrated that this was highly effective 

during the period under review (retrospective effectiveness). 

A high degree of retrospective effectiveness 

exists if the ratio of changes in the fair value or the cash 

flow lies between 0.8 and 1.25. Here the methods used 

for determining effectiveness have to be disclosed. 

By means of a fair value hedge, the Bank hedges 

the fair value of a financial instrument against the risks 

resulting from the change in the reference interest 

rate, share price and/or the exchange rate. In order to 

hedge these risks, above all interest-rate and interest/currency 

swaps are employed. This primarily 

relates to the Group’s new issues business and the 

securities portfolio used for liquidity management, 

NOTES 97 

insofar as these are interest-bearing securities. Equities 

from these portfolios are hedged by derivatives 

with option character. The same holds true for the 

other price risks of structured issues. 

Interest-rate risks resulting from open interest-rate 

positions in asset/liability management are mainly 

hedged at the Commerzbank Group by means of cash 

flow hedges using interest-rate swaps. 

(7) Currency translation 

Assets and liabilities and also items from the income 

statement denominated in foreign currencies, as well as 

immatured spot foreign-exchange transactions, are translated 

at the spot rates, and foreign-exchange forward contracts 

at the forward rate of the balance-sheet date. Currency 

translation for investments and holdings in subsidiaries 

that are denominated in foreign currencies is 

effected at historical cost. Translation gains and losses 

from the consolidation of the capital accounts appear in 

the balance sheet under Equity. 

As a result of their economically independent business 

activity, the financial statements of our units abroad 

that are prepared in foreign currencies are translated at 

the spot rates of the balance-sheet date. 

The expenses and income generated by the translation 

of balance-sheet items are recognized in the income 

statement. Hedged expenses and income are translated at 

the hedging rate. 

The following translation rates apply for the currencies 

that are most important to the Commerzbank Group 

(amount per 71 in the respective currency): 

2003 2002 

USD 1.2630 1.0422 

JPY 135.05 124.27 

GBP 0.7048 0.6500 

CHF 1.5579 1.4548 

(8) Offsetting 

We set liabilities off against claims if these are on the 

same account-holder, are due at call, and agreement has 

been reached with the business associate that interest 

and commissions be calculated as if only a single account 

existed. 

(9) Cash reserve 

With the exception of debt issued by public-sector borrowers, 

which is shown at its fair value, all the items 

appear at their nominal value.

98 NOTES 

(10) Claims 

Claims on banks and customers originated by the 

Commerzbank Group, which are not held for trading, are 

shown at either their nominal value or at amortized cost. 

Premiums and discounts appear under Net interest 

income over the entire lifetime. The book values of claims 

which qualify for hedge accounting are adjusted for the 

gain or loss attributable to the hedged risk. 

Claims not originated by Commerzbank – mainly 

promissory notes – which do not form part of the trading 

portfolio are included in the Investments and securities 

portfolio. 

(11) Provision for possible loan losses 

We fully provide for the particular risks associated with 

banking business by forming individual valuation allowances, 

country valuation allowances and global valuation 

allowances. 

In order to cover the lending risks represented by 

claims on customers and banks, we have formed individual 

valuation allowances according to uniform Group 

standards. Valuation allowances have to be formed for a 

loan if it is probable that not all the interest payments and 

repayments of principal can be made according to the 

agreement. The size of the valuation allowance corresponds 

to the difference between the book value of the 

loan after valuable security has been taken into consideration 

and the cash value of the expected future cash flow, 

discounted by the original effective interest rate. 

In the case of loans to borrowers in countries involving 

an enhanced transfer risk (country risk), an assessment of 

the economic situation is made, based on the appropriate 

economic data. The findings are weighted by the respective 

internal country rating. Wherever necessary, country 

valuation allowances are formed. 

We cover latent credit risks by means of global valuation 

allowances. Past loan losses serve as a yardstick for 

the scale on which such valuation allowances have to be 

formed. 

Insofar as it relates to claims in the balance sheet, the 

aggregate amount of provision for possible loan losses is 

shown separately from Claims on banks and Claims on 

customers. However, provision for risks in off-balancesheet 

business – guarantees, endorsement liabilities, 

lending commitments – is shown as a provision for lending 

risks. 

Unrecoverable accounts are written down immediately. 

Amounts received on written-down claims appear 

in the income statement. 

(12) Genuine repurchase agreements and 

securities-lending transactions 

Repo transactions combine the spot purchase or sale of 

securities with their forward sale or repurchase, the counterparty 

being identical in either case. The securities sold 

under repurchase agreements (spot sale) still appear, and 

are measured, in the consolidated balance sheet as part 

of the securities portfolio. According to counterparty, the 

inflow of liquidity from the repo transaction is shown in 

the balance sheet as a liability to either banks or customers. 

The agreed interest payments are booked as 

interest paid, reflecting the various maturities. 

The outflows of liquidity caused by reverse repos 

appear as claims on banks or customers and are measured 

accordingly. The securities bought under repurchase 

agreements and on which the financial transaction 

is based (spot purchase) are not carried in the balance 

sheet, nor are they measured. The agreed interest from 

reverse repos is counted as interest income, reflecting the 

various maturities. Claims arising from reverse repos are 

not netted against liabilities from repos involving the 

same counterparty. 

We show securities-lending transactions in a similar 

manner to securities in genuine repurchase agreements. 

Lent securities remain in our securities portfolio and are 

measured according to the rules of IAS 39. Borrowed 

securities – insofar as they remain in our portfolio – do not 

appear in our balance sheet, nor are they measured. We 

show cash security furnished by us for securities-lending 

transactions as a claim and received security as a liability. 

(13) Positive fair values from derivative hedging 

instruments 

Derivative financial instruments used for hedging which 

qualify for hedge accounting and have a positive value 

appear under this item. The instruments are measured at 

fair value. 

Listed instruments are measured at market prices; for 

non-listed products, internal price models (net presentvalue 

or option-price models) are used. The hedge 

accounting results for fair value hedges appear in the 

income statement under Net result on hedge accounting. 

By contrast, effective portions of the gains and losses on 

cash flow hedges are recognized under Measurement of 

cash flow hedges in Equity.

(14) Assets held for dealing purposes 

Securities held for dealing purposes, promissory notes 

and precious metals appear in the balance sheet at their 

fair value on the balance-sheet date. Also shown at fair 

value are all derivative financial instruments which are 

not used as hedging instruments in hedge accounting and 

have a positive fair value. For listed products, market 

prices are used; non-listed products are measured on the 

basis of the net present-value method or other suitable 

measurement models (e.g. option-price models). All the 

realized gains and losses and also the non-realized 

changes appear as part of the Trading profit in the income 

statement. Under this item, interest and dividend income 

from trading portfolios are also shown, less the expenses 

required to finance them. 

Spot transactions are recognized immediately they 

are concluded; they appear in the balance sheet at the 

time of performance. 

(15) Investments and securities portfolio 

Our investments and securities portfolio comprises all the 

bonds, notes and other fixed-income securities, shares 

and other variable-yield securities and all the investments 

and investments in associated companies, as well as holdings 

in non-consolidated subsidiaries which are not held 

for dealing purposes. In addition, in accordance with IAS 

39, we include here all the claims on banks and customers 

not originated by the Bank, in particular promissory notes. 

These portfolios are accounted for and measured at 

fair value, or according to the equity method in the case of 

investments in associated companies. If the fair value cannot 

be reliably calculated, the item is shown at cost; this 

primarily holds true for non-listed assets. Net changes are 

shown – after deferred taxes have been taken into consideration 

– under the Revaluation reserve in Equity. Realized 

gains and losses only affect the income statement when 

the holdings are sold. Premiums and discounts are recognized 

in interest income over the lifetime of the investment 

or security. If, however, an effective hedge with a 

derivative financial instrument exists for investments, 

securities or claims not originated by the Bank, that part of 

the change in fair value attributable to the hedged risk 

is shown under the Net result on hedge accounting in the 

income statement. In the case of permanent impairment, 

the recoverable amount is shown; the required writedown 

is charged to the income statement. 

NOTES 99 

(16) Intangible assets 

Apart from special software produced in-house and stockexchange 

seats acquired by the Bank, we include above 

all acquired goodwill under Intangible assets. On each 

balance-sheet date, all goodwill is examined with a view 

to its future economic utility. If it appears that the 

expected utility will not materialize, an extraordinary 

depreciation is made. Otherwise, goodwill is amortized 

over the assumed useful economic life of 15 years, using 

the straight-line method. We depreciate software over a 

period of two to five years. 

Probable useful life 

in years 

Goodwill 15 

Software 2 – 5 

Other 2 – 10 

(17) Fixed assets 

The land and buildings, and also office furniture and equipment, 

shown under this item are capitalized at cost, less 

regular depreciation. Extraordinary depreciation and writeoffs 

are made in the case of permanently impaired value. 

In determining the useful life, the likely physical wear 

and tear, technical obsolescence and also legal and contractual 

restrictions are taken into consideration. All fixed 

assets are depreciated or written off over the following 

periods, using the straight-line method: 

Buildings 

Probable useful life 

in years 

30 – 50 

Office furniture and equipment 2 – 10 

Purchased IT equipment 2 – 8 

In line with the materiality principle, purchases of 

low-value fixed assets in the past financial year are recognized 

immediately as operating expenses. Profits realized 

on the disposal of fixed assets appear under Other operating 

income, losses are shown under Other operating 

expenses. 

(18) Leasing 

In accordance with IAS 17, a lease is classified as an operating 

lease if it does not substantially transfer to the 

lessee all the risks and rewards that are incident to ownership. 

By contrast, finance leases are considered to be 

those agreements which substantially transfer all the risks 

and rewards to the lessee.

100 NOTES 

– The Group as lessor – 

Insofar as the leasing companies within the Commerzbank 

Group are involved in operating lease business, economic 

ownership of the object of the agreement remains 

with the Group company. Leased objects appear in the 

consolidated balance sheet under Fixed assets. Leased 

objects are shown at cost or production cost, less regular 

depreciation over their useful economic lives or extraordinary 

depreciation necessary on account of permanent 

impairment of value. Unless a different distribution suggests 

itself in individual cases, the proceeds from leasing 

transactions are recognized on a straight-line basis over 

the lifetime of the agreement and are shown under Net 

interest income. 

If virtually all the risks and rewards relating to the 

leased property are transferred to the lessee (finance 

leases), the Commerzbank Group recognizes a claim on 

the lessee. The claim is shown at its net investment value 

at the inception of the agreement. Leasing payments 

received are divided into an interest portion which 

appears as interest income and a repayment portion. The 

income is recognized as interest income for the respective 

period. 

– The Group as lessee – 

The payments made under operating lease agreements 

are included under Operating expenses. The costs are 

computed like a rental payment on a regular basis corresponding 

to the useful life of the leased object. No contractual 

obligations existed in the 2003 financial year 

which require classification as finance leases. 

(19) Liabilities to banks and customers and 

also Securitized liabilities 

Financial liabilities are accounted for at amortized cost. 

The derivatives embedded in liabilities (embedded derivatives) 

have been separated from their host debt instrument, 

measured at fair value and shown under either 

Assets held for dealing purposes or Liabilities from dealing 

activities. As part of hedge accounting, hedged liabilities 

were adjusted for the book gain or loss attributable to 

the hedged risk. 

(20) Negative fair values from derivative hedging 

instruments 

Under this item, we show derivative hedging instruments 

with a negative fair value which do not serve dealing 

purposes. The financial instruments are measured at fair 

value, with market prices used as a basis for measuring 

listed instruments; internal price models (net presentvalue 

or option-price models) are applied in the case of 

non-listed products. The net results from hedge accounting 

for instruments classified as fair value hedges appear 

in the income statement. We show the effective portions 

of the gains or losses on cash flow hedges under Measurement 

of cash flow hedges in Equity. 

(21) Liabilities from dealing activities 

Derivative financial instruments which have a negative 

fair value, and delivery obligations from short sales of 

securities, are shown as Liabilities from dealing activities. 

Such liabilities are measured at their fair value. 

(22) Provisions for pensions and similar commitments 

Virtually all employees at the Parent Bank as well as staff 

at some subsidiaries in Germany are covered by at least 

two forms of company provision for old age. 

In the first case, employees are given an indirect – contribution-based 

– commitment (defined-contribution plan), 

for which the Group, with employees also involved, pays 

a fixed amount for old-age provision to external providers, 

including Versicherungsverein des Bankgewerbes 

a.G. (BVV), Berlin, and to Versorgungskasse des Bankgewerbes 

e.V., Berlin. 

The size of future pension benefits is determined here 

by the amounts paid in and – for the non-guaranteed portion 

of the benefits – by the accrued income on the assets. 

The classification of this provision as an indirect commitment 

means that the contributions to BVV and Versorgungskasse 

are recognized as current expenses, eliminating 

the need to form provisions. 

In the second case, employees are given a direct commitment, 

under which the promised benefit is defined and 

depends upon such factors as age, salary and length of 

service (defined-benefit plan). 

In order to meet promised pension benefits, we accumulate 

the assets required to meet the pension commitment 

for the most part internally and show the corresponding 

provision under Liabilities. A small part of these 

assets is invested in a trust to provide additional protection 

against insolvency. The trustee of these assets held in 

trust is Commerzbank Pension-Trust e.V. Allocation was 

made to this trust in November 2003. 

The pension expenses for direct commitments, which 

have to appear in the income statement, consist of several 

components. First and foremost, the service cost has to be 

considered. In addition, there is the interest cost on the 

cash value of the commitment, as the time at which the

commitment must be met has moved one period closer. 

The net earnings achieved on the separated plan assets 

(assets held in trust) are deducted from expenses. If amortization 

amounts arise for actuarial gains and losses due 

to the 10% fluctuation-band rule, the expenses for the 

period rise or fall accordingly. 

The size of the provisions formed is initially determined 

by the cash value of the commitment to be met. The 

part which is covered by the separate assets held in trust 

has to be netted with the commitment. On account of the 

fluctuation-band rule, the amount of provision to be 

formed each year is as follows: 

Cash value of commitment for direct commitments 

less separate pension assets 

less/plus not recognized actuarial gains or losses 

= size of provision for pensions 

The pension commitment is calculated annually by 

an independent actuary, using the projected-unit-credit 

method. This calculation is based not only on biometric 

assumptions but above all on a current market interest 

rate for prime-quality long-dated bonds as well as the 

rates of increase for salaries and pensions to be expected 

in the future. We only recognize higher or lower commitments 

as a result of actuarial calculations if they lie outside 

a 10% fluctuation band of the actuarially estimated 

value. The assumptions on which the actuarial calculations 

have been based are: 

31.12.2003 31.12.2002 

Calculatory interest rate 5.50% 5.75% 

Change in salaries 2.50% 2.75% 

Adjustment to pensions 1.25% 1.50% 

The second pillar of the pension commitments has 

been terminated as of December 31, 2004. All the pension 

expectancies existing up to this date will be preserved. 

According to the report of our actuary, the termination 

had no impact on the evaluation of pension commitments 

as of December 31, 2003. 

The commitments similar to those for pensions 

include commitments under early-retirement schemes 

and under part-time work schemes for older staff, which 

have been computed with the aid of actuarial rules. 

NOTES 101 

(23) Other provisions 

We form Other provisions on the scale deemed necessary 

for liabilities of uncertain amount towards third parties 

and for anticipated losses related to immatured contracts. 

We are not permitted by IAS rules to form provisions for 

expenses not related to an external commitment. In the 

2003 financial year, we formed provisions of 7209m for 

restructuring measures. The basis for the formation of 

this provision was a detailed overall plan, coordinated 

with the boards and bodies of the companies affected, 

providing information on concrete individual measures – 

above all, staff reductions. 

(24) Taxes on income 

Current tax assets and liabilities were calculated by applying 

the valid tax rates at which a refund from, or a payment 

to, the relevant fiscal authorities is expected. 

Deferred tax assets and liabilities derive from differences 

between the value of an asset or liability as shown 

in the balance sheet and its assigned value in tax terms. In 

the future, these will probably either increase or reduce 

taxes on income (temporary differences). They were 

measured at the specific income-tax rates which apply in 

the country where the company in question has its seat 

and which can be expected to apply for the period in 

which they are realized. Deferred taxes on as yet unused 

losses carried forward are shown in the balance sheet 

if taxable profits are likely to occur at the same unit. Tax 

assets and liabilities are not netted against one another; 

no discounting is practised. Deferred tax assets and liabilities 

are formed and carried such that – depending on the 

treatment of the underlying item – they are recognized 

either under Taxes on income in the income statement or 

they are set off against the relevant equity items with no 

effect on the income statement. 

Income-tax expenses or income which are attributable 

to the Profit from ordinary activities after restructuring expenses 

and to Expenses arising from special factors are 

shown under Taxes on income in the consolidated income 

statement and divided in the notes into current and 

deferred taxes in the financial year. Other taxes which are 

independent of income are subsumed under Other operating 

result. Current and deferred tax assets and tax liabilities 

appear as separate asset or liability items in the 

balance sheet. No taxes on income arose in the past financial 

year in connection with extraordinary business developments.

102 NOTES 

(25) Subordinated capital 

Under Subordinated capital, we carry issues of profitsharing 

certificates as well as securitized and non-securitized 

subordinated liabilities. After their initial recognition 

at cost, they are shown at amortized cost. Premiums and 

discounts are recognized under Net interest income over 

the entire lifetime. 

(26) Trust business 

Trust business involving the management or placing of 

assets for the account of others is not shown in the balance 

sheet. Commissions received from such business 

are included under Net commission income in the income 

statement. 

(27) Treasury shares 

Treasury shares held by the Parent Bank in its portfolio on 

the balance-sheet date are deducted directly from Equity. 

Gains and losses resulting from the Bank’s own shares are 

set off against one another, with no effect on net profit. 

(28) Staff remuneration plans 

For its executives and selected other members of staff, the 

Group has approved five ”long-term performance plans” 

(LTP). These plans permit a remuneration in cash geared 

to the performance of the share price or a stock index; 

under the currently valid classification, they are considered 

to be ”virtual” stock option plans. The programmes 

entail a payment commitment if the Commerzbank share 

outperforms the Dow Jones Euro Stoxx ® Bank index (LTP 

1999, 2000, 2001, 2002 and 2003) and/or the absolute performance 

of the Commerzbank share is at least 25% (LTP 

2000, 2001, 2002 and 2003). 

LTP 1999 will run for three years, which, depending 

on the target being attained (outperformance), may be 

extended to a maximum of five years. Payment will be 

linked to a rise in the performance of the Commerzbank 

share against the Dow Jones Euro Stoxx ® Bank index 

within a range of 1 to 10 percentage points. Depending on 

the employee’s function group and assessed performance 

at the time when the plan was introduced and also on the 

percentage of outperformance, the employee can receive 

between 710,000 and 7150,000. Should the target not be 

attained after three or four years, which was the case at 

the end of the first quarter of both 2002 and 2003, a fresh 

and final evaluation will be made after five years in 2004. 

If no minimal level of outperformance has been attained 

by that time, the claim to payment under LTP 1999 will 

expire. 

LTP 2000, 2001, 2002 and 2003 require eligible participants 

in the plan to purchase Commerzbank shares. The 

scale of such participation for staff who are not members 

of the Board of Managing Directors depends on their function 

group (possible participation: between 100 and 1,200 

shares). Payments under these plans will be determined 

by two criteria: 

For 50% of the shares: 

● the Commerzbank share outperforms the Dow Jones 

Euro Stoxx ® Bank index (payment guaranteed by outperformance 

of at least 1 percentage point to a maximum 

of 10 percentage points). 

For 50% of the shares: 

● an absolute rise in the price of the Commerzbank 

share (payment guaranteed by a rise of at least 25 percentage 

points to a maximum of 52 percentage 

points). 

Given maximal achievement of the two criteria, eligible 

participants will receive 7100 per share of their own 

participation, whereby Commerzbank shares will be delivered 

to the participant’s custody account for 50% of this 

gross amount. 

Payment and the delivery of shares is dependent upon 

the Parent Bank paying a dividend for the financial year. 

The first comparison of the base prices of the first 

quarter of 2000 (LTP 2000), the first quarter of 2001 (LTP 

2001), the first quarter of 2002 (LTP 2002) or the first quarter 

of 2003 (LTP 2003) with the data for the comparable 

period will be made after three years in either case. 

Should none of the exercising criteria have been met after 

this time has elapsed, comparison will be made with the 

base data at annual intervals. The first comparison for LTP 

2000 with the prices for the first quarter of 2003 revealed 

that the exercise criteria had not been fulfilled. If none of 

the performance targets have been achieved after five 

years, the plan will be terminated. 

For the commitments arising from the LTPs described, 

we calculate annually, in accordance with the relevant 

GASB standard model, the pro-rata overall value of the 

LTP; wherever necessary, we form a provision and charge 

it to Operating expenses. Given the high base prices for 

LTPs 1999 to 2002, there was no need to form a provision 

for the 2003 financial year. For LTP 2003, where utilization 

on the basis of the share price level on 31.12.2003 seems 

likely, the necessary provisions of 76.3m have been 

formed.

Within the Jupiter International Group plc (JIG), three 

staff remuneration/stock-option plans existed as of 

December 31, 2003. Under the terms of the so-called B 

shares or Profit Shares Plan, eligible members of staff 

receive a contractually assured payment, linked to possession 

of virtual shares and to the Jupiter Group’s 

respective net profit at the end of the years 2002 to 2004. 

Each payment will be made in three annual instalments, 

the size of the payment being geared to the 2000 profit. 

Insofar as the net profit in subsequent years falls below 

this base value, payments will also be reduced. In 2003, no 

new B shares were issued, as this plan is being terminated. 

The necessary allocations to provisions have been 

made to the required extent and charged to operating 

expenses. 

The so-called C shares or Growth Shares Plan gives 

those eligible – a group of senior staff – the right to subscribe 

to shares of Commerz Asset Management (UK) plc, 

which are also subject to an obligation to purchase on the 

part of the Parent Bank. The value of these shares is oriented 

to the typified change in value of the JIG Group. 

Those eligible do not receive a guaranteed payment, as 

the reference figure may alter either positively or negatively. 

Employees have the right to tender delivery of 

shares annually, within certain limits, but they also have 

the possibility of disposing of their entire portfolio after 

four years. In addition, certain rights exist in connection 

with a change-of-control clause. The reference base for 

this plan was adjusted in 2003, with the adjusted profit for 

2000 being replaced by that for 2002. As of December 31, 

2003, no provision was required on account of the development 

of Jupiter International Group’s value. 

NOTES 103 

At the same time, an ongoing “options programme” 

was launched in 2003 in favour of the employees of JIG, 

which entails a cash compensation based on the performance 

of JIG and can be considered to be a virtual 

stock option plan. Internally, this plan is known as the 

“D options plan” and entitles all those to participate who 

had joined Jupiter by December 31, 2003, and were 

already entitled under the C Shares Plan. Under this plan, 

a payment falls due if the adjusted profit in the year prior 

to the exercising of the option is higher than the level of 

the basis year. For the options granted in 2003, the 2003 

adjusted profit was established as the reference figure. A 

third of the options may be exercised three years after 

they are granted and a further third after four years, while 

all options must be exercised five years after they are 

granted, otherwise they expire. As of December 31, 2003, 

no payments seemed likely under this plan. As a result, no 

provisions have to be formed. 

In addition, it is possible at other subsidiaries, including 

in Asset Management, for selected employees to participate 

through private equity models in the performance 

of the respective company. Payment in such cases 

depends on the extent to which fixed performance targets 

are attained. These models include direct investment in 

shares of the respective company. Frequently, these are 

offered at reduced prices and in combination with call or 

put options. In addition, warrants and share subscription 

rights are issued. Premiums are also granted which may 

similarly be used to subscribe to shares. The observance 

of blocking periods and agreements for later repurchase 

determine whether additional income is received. For 

such models, we calculate the need for provisions annually, 

using suitable methods, and show this under Operating 

expenses.

104 NOTES 

Expenses arising from special factors 

In connection with an impairment test, we subjected our 

equity investments portfolio to a revaluation. This impairment 

test yielded an amount of 72,325m to be written 

down. For the impairment test, we drew upon all the available 

information (market prices, annual or interim financial 

accounts, ratings, analysts’ opinions). Even though in 

accordance with the principles which we apply, a – possibly 

– protracted weak market price does not necessarily 

lead to an impairment, we decided to take this step 

because our expectations as regards a recovery in value 

had not been realized. The valuations were reduced in 

accordance with the Commerzbank Group’s applied 

measurement principles to the value that could be realized 

in the market at that point in time and were taken 

through the income statement. 

We have written down listed available-for-sale investments, 

investments in associated companies and also 

goodwill. In addition, the expenses for cancelling the 

related funding of the written-down financial investments 

and industrial participations were assigned to Expenses 

arising from special factors. 

The increase in value of the relevant listed investments 

between the write-down date and December 31 

2003, appears under the asset item Investments and securities 

portfolio. By contrast, these increases in equity were 

shown under the Revaluation reserve.

Major differences in accounting, 

measurement and consolidation methods: 

IAS/IFRS compared with HGB 

The objective of financial statements based on IAS/IFRS is 

to provide information on the group’s asset and financial 

position and its earnings performance and also changes 

in these over time. By contrast, financial statements based 

on HGB are primarily geared to investor protection and 

are also influenced by tax-law provisions due to their 

authoritative character for the balance sheet prepared for 

tax purposes. Given these different objectives, the following 

major differences in accounting and measurement 

methods arise between IAS/IFRS and HGB: 

Provision for possible loan losses 

Provision for possible loan losses is shown as a charge on 

the assets side. Hidden reserves pursuant to Art. 340f, 

HGB may not be formed in IAS/IFRS financial statements. 

Trading portfolios and derivative financial instruments 

In accordance with IAS 39, financial assets held for dealing 

purposes (Assets held for dealing purposes) and certain 

financial liabilities (Liabilities from dealing activities) 

as well as derivative financial instruments not held for 

trading purposes (hedging derivatives) always have to be 

measured at fair value. Depending on how these financial 

instruments are classified, all gains and losses are either 

shown in the income statement or under Equity with no 

effect on net profit, regardless of whether they are realized 

or not. Under HGB rules, however, unrealized gains 

may not be recognized. 

Investments and securities portfolio 

Investments and securities as well as available-for-sale 

claims not originated by the Bank are measured at fair 

value in accordance with IAS 39 or, insofar as this cannot 

be reliably ascertained, they are shown at cost. The result 

of measurement has no effect on income and is shown in 

the Revaluation reserve. Under German accounting principles, 

investments are part of fixed assets and have to be 

shown at cost. If their value is likely to be permanently 

impaired, they have to be written down at their lower 

value. 

NOTES 105 

In terms of their character, securities in the availablefor-sale 

portfolio are held as part of the liquidity reserve 

according to HGB and have thus to be classified as current 

assets. Under HGB rules, the strict lower-of-cost-or-market 

principle applies in the measurement of such securities 

portfolios. In accordance with German accounting 

rules, claims not originated by the Bank have to be recognized 

at amortized cost, less write-downs. 

Hedge accounting 

Pursuant to IAS 39, hedges may be created between a 

hedged item and a derivative financial instrument for 

hedge accounting purposes. Hedged items may be financial 

assets (e.g. claims or securities) and financial commitments 

(e.g. liabilities or bonds issued). Both for fair value 

hedges and for cash flow hedges, detailed rules exist 

which call for the fair value of a derivative hedging instrument 

to be shown in gross form. Under German accounting 

principles, however, hedging transactions are taken 

account of by means of the lower-of-cost-or-market principle, 

applied in measuring the hedged items. 

Intangible assets developed in-house and goodwill 

Whereas intangible assets developed in-house may not 

be recognized under HGB rules, IAS/IFRS requires this, if 

certain conditions are fulfilled. Goodwill, resulting from 

full consolidation, which in accordance with HGB provisions 

may be set off directly against retained earnings in 

the consolidated financial statements, has to be recognized 

as an asset and amortized under IAS rules. 

Pension commitments 

In accordance with IAS, pension commitments are calculated 

using the projected-unit-credit method. The calculation 

takes account of future commitments, reflecting 

future increases in pay and pensions and also inflation. 

The discount factor under IAS/IFRS rules is related to the 

long-term interest rate. By contrast, HGB accounting is 

regularly geared to the respective valid income-tax regulations, 

in particular the normal entry-age method.

106 NOTES 

Other provisions 

In accordance with IAS/IFRS, provisions may only be 

formed if they relate to an external commitment. Provisions 

for expenses, possible under HGB, for the purpose 

of recognizing future outlays as expenses in the past 

financial year are not permitted. IAS/IFRS rules require 

more concrete details than HGB as regards the formation 

of provisions for restructuring, covering among other 

things the development, adoption and announcement of a 

detailed plan. 

Deferred tax assets and liabilities 

Under IAS/IFRS rules, deferred tax assets and liabilities 

are calculated with reference to the balance sheet. Advantages 

deriving from tax loss carry-forwards have to be 

capitalized if it can be assumed that they will be used at a 

later date. The income-tax rates employed to measure the 

differences between the values assigned in the balance 

sheet and those for tax purposes are future-oriented. No 

netting occurs. By contrast, the HGB approach to recognizing 

deferred tax assets and liabilities is geared to the 

income statement and currently valid income-tax rates 

are applied. The differences in approach tend to make 

deferred taxes more significant under IAS/IFRS rules. 

Equity 

In IAS financial statements, minority interests appear as a 

separate balance-sheet item. In accordance with Art. 307, 

HGB, interests held by other shareholders have to be 

shown separately within equity. With the rules of IAS 39 

applied, changes attributable to the investments and 

securities portfolio and also effective portions of the gains 

and losses on cash flow hedges have to be shown in 

equity with no effect on net income. This type of incomeneutral 

accounting is not found in German accounting 

rules. Under IAS/IFRS rules, treasury shares held on the 

balance-sheet date are deducted from equity; the gains 

and losses attributable to treasury shares are set off 

against reserves with no effect on income. Pursuant to 

HGB rules, a reserve for treasury shares has to be formed 

equivalent in amount to the treasury shares shown on the 

assets side of the balance sheet, while measurement and 

trading results are reflected in the income statement. 

Trust business 

Trust business, which appears in the balance sheet in HGB 

accounting, does not appear there under IAS/IFRS rules. 

Tax valuation 

In line with the so-called reverse authority principle, valuation 

principles are applied under HGB rules that comply 

with tax-law provisions. Financial statements prepared 

under IAS/IFRS rules may not contain special depreciation 

and valuation principles that are permissible under tax 

regulations insofar as they deviate from valuations 

required by IAS/IFRS rules. As from the 2003 financial 

year, this ban also applies to consolidated financial statements 

prepared pursuant to HGB, due to the legal 

changes produced by the German legislation on transparency 

and publications.

Notes to the income statement 

(29) Net interest income 

NOTES 107 

2003 2002 Change 

7 m 7 m in % 

Interest income from lending and money-market transactions 

and also from available-for-sale securities portfolio 11,396 17,681 –35.5 

Dividends from securities 104 84 23.8 

Current result from investments and subsidiaries 91 120 –24.2 

Current result from investments in associated companies 85 58 46.6 

Current income from leasing 91 89 2.2 

Interest income 11,767 18,032 –34.7 

Interest paid on subordinated capital 550 623 –11.7 

Interest paid on securitized liabilities 3,262 5,318 –38.7 

Interest paid on other liabilities 5,117 8,934 –42.7 

Current expenses from leasing 62 24 • 

Interest expenses 8,991 14,899 –39.7 

Total 2,776 3,133 –11.4 

Interest margins: 

The average interest margin, based on the average risk-weighted assets in balance-sheet business according to BIS, 

was 2.39% (previous year: 2.16%). 


Provision for possible loan losses appears as follows in the consolidated income statement: 

2003 2002 Change 

7 m 7 m in % 

Allocation to provisions –1,562 –1,974 –20.9 

Reversals of provisions 597 690 –13.5 

Direct write-downs –145 –99 46.5 

Income received on written-down claims 26 62 –58.1 

Total –1,084 –1,321 –17.9

108 NOTES 

(31) Net commission income 

(32) Net result on hedge accounting 

2003 2002 Change 

7 m 7 m in % 

Net result on derivatives used as hedging instruments –358 –281 27.4 

Net result on hedged items 398 225 76.9 

Total 40 –56 • 

This item reflects the gains and losses attributable to effective hedges in connection with hedge accounting. The result 

deriving from hedging instruments and the related hedged items represents only the effects on measurement arising 

from fair value hedges. 

(33) Trading profit 

Trading profit has been split into two components: 

● Net result on proprietary trading in securities, promissory 

notes, precious metals and derivative instruments. 

● Net result on the measurement of derivative financial 

instruments which do not form part of the trading 

book and do not qualify for hedge accounting. 

2003 2002 Change 

7 m 7 m in % 

Securities transactions 802 823 –2.6 

Asset management 509 511 –0.4 

Payment transactions and foreign commercial business 388 346 12.1 

Guarantees 134 140 –4.3 

Income from syndicated business 94 80 17.5 

Other net commission income 209 220 –5.0 

Total 2,136 2,120 0.8 

All the financial instruments held for dealing purposes 

are measured at their fair value. We use market prices to 

measure listed products, while internal price models 

(above all, net present-value and option-price models) are 

used in determining the current value of non-listed trading 

transactions. Apart from the realized and unrealized 

gains and losses attributable to trading activities, the 

Trading profit also includes the interest and dividend 

income related to such transactions and also their funding 

costs. 

2003 2002 Change 

7 m 7 m in % 

Net result on proprietary trading 841 565 48.8 

Net result on the measurement of derivative financial instruments –104 –21 • 

Total 737 544 35.5

(34) Net result on investments and securities portfolio (available for sale) 

NOTES 109 

Under the Net result on investments and securities portfolio, we show the disposal proceeds and the gains and losses 

on available-for-sale securities, claims not originated by the Bank, investments, investments in associated companies 

and holdings in subsidiaries which have not been consolidated. 

2003 2002 Change 

7 m 7 m in % 

Result on available-for-sale securities and 

claims not originated by the Bank 174 –127 • 

Result on disposals and measurement of investments, 

investments in associated companies and 

holdings in subsidiaries 117 116 0.9 

Total 291 –11 • 

From the year-earlier Result on disposals and measurement of investments in associated companies, an amount of 

777m was transferred to Expenses arising from special factors. 

(35) Operating expenses 

The Group’s Operating expenses consist of personnel and 

other expenses, and depreciation on office furniture and 

equipment, real property, and also on other intangible 

assets. In a year-on-year comparison, we achieved a 

Personnel expenses: 

reduction of 12.5% from 75,155m to 74,511m, which is 

due above all to the measures adopted under the second 

cost-cutting offensive project. The expenses break down 

as follows: 

2003 2002 Change 

7 m 7 m in % 

Wages and salaries 1,925 2,113 –8.9 

Compulsory social-security contributions 294 307 –4.2 

Expenses for pensions and other employee benefits 

of which: 

223 259 –13.9 

contributions to BVV and Versorgungskasse des Bankgewerbes 53 53 0.0 

company pension scheme 170 206 –17.5 

Total 2,442 2,679 –8.8

110 NOTES 

Other expenses: 

(36) Other operating result 

The Other operating result primarily comprises allocations 

to and reversals of provisions, as well as interim 

expenses and income attributable to hire-purchase agreements. 

Expenses and income arising from building and 

architects’ fees occur in connection with the construction 

2003 2002 Change 

7 m 7 m in % 

Expenses for office space 482 604 –20.2 

IT costs 

Compulsory contributions, other administrative and 

467 527 –11.4 

company-law expenses 229 277 –17.3 

Advertising, PR and promotional costs, consulting 91 111 –18.0 

Workplace costs 185 247 –25.1 

Sundry expenses 140 143 –2.1 

Total 1,594 1,909 –16.5 

Depreciation of office furniture and equipment, real property and other intangible assets: 

2003 2002 Change 

7 m 7 m in % 

Office furniture and equipment 426 511 –16.6 

Real property 19 27 –29.6 

Other intangible assets 30 29 3.4 

Total 475 567 –16.2 

management of our sub-group CommerzLeasing und 

Immobilien AG. Other taxes are also included in this item. 

Last year, we also showed the proceeds from the disposal 

of the RHEINHYP Group under this item. 

2003 2002 Change 

7 m 7 m in % 

Major Other operating expenses 224 188 19.1 

Expenses arising from building and architects’ services 45 63 –28.6 

Allocations to provisions 111 63 76.2 

Hire-purchase expenses and interim costs 68 62 9.7 

Major Other operating income 214 985 –78.3 

Income from the disposal of RHEINHYP Group – 721 • 

Reversals of provisions 73 78 –6.4 

Hire-purchase proceeds and interim income 70 70 0.0 

Income from building and architects’ services 53 69 –23.2 

Income from disposal of fixed assets 18 47 –61.7 

Balance of sundry Other operating expenses/income 184 141 30.5 

Other operating result 174 938 –81.4 

From the year-earlier figure for major Other operating expenses, an amount of 7170m was transferred to Expenses 

arising from special factors.

(37) Regular amortization of goodwill 

(38) Expenses arising from special factors 

We made the value adjustments to our portfolio of financial 

assets and participations. For the impairment test, we 

have drawn upon all the available information (market 

prices, annual and interim financial accounts, ratings, 

analysts’ opinions, etc.). On principle, a – possibly protracted 

– weak market price in itself does not lead to an 

impairment in accordance with the principles we apply. 

All the same, our expectations as regards a recovery in 

NOTES 111 

The regular amortization of goodwill amounted to 7110m (previous year: 7108m). This also includes the amortization of 

goodwill in companies included at equity. 

2003 2002 Change 

7 m 7 m in % 

Value adjustments to the financial assets and 

participations portfolio, including the costs of 

cancelling related funding 2,325 247 • 

Total 2,325 247 • 

(39) Restructuring expenses 

In March 2003, we decided to launch the second cost-cutting 

offensive. As part of this project, procedures are to be 

streamlined and made more efficient by means of a series 

of concrete individual measures at both head office and 

value have not been realized. We therefore now assume 

an impairment of value. Against this background, we saw 

ourselves obliged to make valuation adjustments on the 

scale of 72.3bn to major parts of our portfolio of financial 

assets and industrial shareholdings in 2003. 

The year-earlier figure was transferred from the items 

Net result on investments and securities portfolio (available-for-sale 

portfolio) and Other operating result. 

2003 2002 Change 

7 m 7 m in % 

Expenses for restructuring 

measures introduced 104 209 –50.2 

Total 104 209 –50.2 

various subsidiaries. In addition, it was resolved to discontinue 

various uneconomical activities. The expenses 

incurred through these measures to reduce personnel and 

related other expenses come to 7104m.

112 NOTES 

(40) Taxes on income 

Income-tax expenses break down as follows: 

2003 2002 Change 

7 m 7 m in % 

Current taxes on income 197 356 –44.7 

Deferred taxes 52 –459 • 

Total 249 –103 • 

Deferred taxes on the assets side include tax expenses of 726m (previous year: 726m) from the writing-back of capitalized 

advantages deriving from loss carry-forwards, which were used in the past financial year. 

The following transitional presentation shows the connection between the Profit from ordinary activities and Taxes on 

income in the past financial year: 

2003 2002 

7 m 7 m 

Net pre-tax profit according to IAS –1,980 –372 

Group’s income-tax rate 39.9 39.9 

Calculated income-tax paid in financial year 

Effects due to differing tax rates affecting income 

–790 –148 

during periods in question –28 40 

Effects of taxes from previous years recognized in past financial year 49 92 

Effects of non-deductible operating expenses and tax-exempt income 741 –1,021 

Regular amortization of goodwill 43 43 

Deferred tax assets not reported 158 821 

Other effects 76 70 

Taxes on income 249 –103 

The Group income-tax rate selected as a basis for the transitional 

presentation is made up of the corporate incometax 

rate of 25% to be applied in Germany in future, plus the 

solidarity surcharge of 5.5%, and an average rate of 18.4% 

for trade earnings tax. With the deductibility of trade earnings 

tax taken into consideration, the German income-tax 

rate is roughly 39.9%. 

Income-tax effects reflect discrepancies between 

effective tax rates caused by differences between the 

German income-tax rate and those of the various countries 

where Group companies are based, which as in the 

previous year range between 0% and 46%, and are also 

due to differences in the municipal factors affecting trade 

tax in Germany.

(41) Basic earnings per share 

NOTES 113 

Loss/profit per share 31.12.2003 31.12.2002 Change 

in % 

Operating profit ( 7 m) 559 192 • 

Net loss (7 m) –2,320 –298 • 

Average number of ordinary shares issued (units) 544,202,112 533,637,824 2.0 

Operating profit per share (7) 1.03 0.36 • 

Loss per share (7) –4.26 –0.56 • 

The loss per share, calculated in accordance with IAS 33, 

is based on net loss without the loss/profit attributable to 

minority interests. 

(42) Cost/income ratio 

In the past financial year and on December 31, 2003, 

no conversion or option rights were outstanding. The 

diluted loss per share, therefore, corresponds to the loss 

per share. 

2003 2002 Change 

in % 

Cost/income ratio before 

regular amortization of goodwill, 


and restructuring expenses 73.3 77.3 –5.2

114 NOTES 

(43) Segment reporting 

The results of the operative business lines forming the 

Commerzbank Group are reflected in segment reporting. 

The basis is provided by our internal management information 

memoranda, which are prepared monthly in line 

with IAS rules. 

Segmentation into business lines is based on the 

Group’s internal organization structure, which since January 

1, 2001, has consisted of two divisions: Retail Banking 

and Asset Management, on the one hand, and Corporate 

and Investment Banking, on the other. 

Survey of the structure of the operative divisions valid in the past financial year: 

Retail Banking and 


division 

Corporate and 


division 

Mortgage banks 

The Retail Banking and Asset Management division is 

made up of the Retail Banking, Private Banking and Asset 

Management departments. 

The Corporate and Investment Banking division comprises 

our corporate activities and business involving 

institutions, as well as investment-banking operations. 

We show the mortgage banks as a separate business 

line. We also present Group Treasury separately. 


department 

Private Banking 

department 


department 


department 


department 


department 

Real Estate 

department 

Securities 

department 

1) Grouped together in segment reporting 

under Corporate customers and 

institutions 

1) 

1) 

1) 

1)

Our segment reporting breaks down into the following 

seven segments: 

● Retail banking, which also includes private banking 

and direct banking through our subsidiary comdirect 

bank Aktiengesellschaft. 

● Asset management, above all consisting of COMINVEST 

Asset Management GmbH, ADIG-Investment Luxemburg 

S.A., Jupiter International Group plc and Montgomery 

Asset Management, LLC. 

● Corporate customers and institutions, with the Corporate 

Banking, Multinational Corporates, and Financial 

Institutions departments, as well as real-estate business 

and the commercial corporate activities of our 

domestic and foreign units. 

● Securities, with all the equity and bond-trading activities, 

trading in derivative instruments, interest-rate 

and currency management, and also M&A business. 

● Group Treasury, which is responsible for domestic 

liquidity management and also for managing the 

Bank’s capital structure. 

● Mortgage banks, consisting of Eurohypo Aktiengesellschaft, 

Hypothekenbank in Essen AG and also Erste 

Europäische Pfandbrief- und Kommunalkreditbank in 

Luxemburg. Eurohypo Aktiengesellschaft is consolidated 

at equity. 

● The ”others and consolidation” segment, where the 

profit contributions appear for which the individual 

banking departments are not responsible. These also 

include those expenses and income items that are 

necessary in order to reconcile the control variables of 

internal accounting, shown in the segment reporting 

of the operative departments, with the corresponding 

external accounting data. 

The result generated by the segments is measured in 

terms of the operating profit and the pre-tax profit, as well 

as the figures for the return on equity and the cost/income 

ratio. Through the presentation of pre-tax profits, minority 

interests are included in both the result and the average 

equity tied up. All the income for which a segment is 

responsible is thus reflected in the pre-tax profit. 

The operative return on equity or the return on equity 

of the pre-tax profit, as one of the Commerzbank Group’s 

control variables, is calculated from the relationship 

between the operating profit or the pre-tax profit and the 

average amount of equity that is tied up; it shows the 

return on the equity that is invested in a given business 

line. 

NOTES 115 

The cost/income ratio is another central control variable, 

reflecting the cost efficiency of the various segments. 

The cost/income ratio in operating business represents 

the quotient formed by operating expenses and 

income before provisioning. 

Income and expenses are shown such that they reflect 

the originating unit and appear at market prices, with the 

market interest rate applied in the case of interest-rate 

instruments. The net interest income of the respective 

segment also includes return on equity and investment 

yield as imputed variables. Segments with equity or 

which have been endowed with capital are charged interest 

on their capital in order to ensure comparability 

with units which do not have equity. The investment yield 

achieved by the Group on its equity is assigned to various 

units such that it reflects the average amount of equity 

that is tied up. The interest rate that is applied corresponds 

to that of a risk-free investment in the long-term 

capital market. Equity is calculated in accordance with 

Principle I of German banking supervision on the basis of 

the established average amount of risk-weighted assets 

and the capital charges for market risk (risk-weighted 

asset equivalents). 

Direct and indirect expenditure represent the operating 

expenses which are shown in the operating profit. 

They consist of personnel costs, other expenses and 

depreciation of fixed assets and other intangible assets, 

excluding goodwill. Regular amortization of goodwill, 

expenses arising from special factors and restructuring 

expenses appear below the operating profit in the pre-tax 

profit. Operating expenses are assigned to the individual 

segments on the basis of the causation principle. The indirect 

expenses arising in connection with internal services 

are charged to the beneficiary or credited to the segment 

performing the service. 

The balance on expenses arising from special factors 

in the Others and consolidation segment relates to 

expenses arising from the revaluation of our equity participations.

116 NOTES 

Breakdown, by segment 

2003 financial year Retail Asset Corporate Securities Group Mortgage Others Total 

banking manage- customers Treasury banking and 

ment and insti- consoli- 

7 m tutions dation 

Net interest income 

Provision for 

1,075 –17 1,596 62 238 273 –451 2,776 

possible loan losses 


–159 – –885 – – –40 – –1,084 

after provisioning 916 –17 711 62 238 233 –451 1,692 

Net commission income 

Net result on 

911 436 726 96 –1 –12 –20 2,136 

hedge accounting – 1 – – –1 40 – 40 



4 12 30 783 8 –127 27 737 

and securities portfolio 5 12 55 10 32 142 35 291 

Other operating result 13 –9 64 –16 – –2 124 174 

Income 1,849 435 1,586 935 276 274 –285 5,070 

Operating expenses 1,591 345 1,231 932 56 32 324 4,511 

Operating profit 

Regular amortization 

258 90 355 3 220 242 –609 559 

of goodwill 

Expenses arising 

– 77 9 1 – 18 5 110 

from special factors 

Restructuring 

– – – – – – 2,325 2,325 

expenses – 8 25 34 – – 37 104 

Pre-tax profit 258 5 321 –32 220 224 –2,976 –1,980 

Average equity tied up 


1,804 639 5,154 995 108 888 1,769 11,357 

on equity (%) 


14.3 14.1 6.9 0.3 203.7 27.3 • 4.9 

operating business (%) 

Return on equity of 

79.2 79.3 49.8 99.7 20.3 10.2 • 73.3 

pre-tax profit (%) 14.3 0.8 6.2 –3.2 203.7 25.2 • –17.4 

Staff (average no.) 10,726 1,598 9,335 1,374 42 156 9,667 32,898

Breakdown, by segment 

NOTES 117 

2002 financial year Retail Asset Corporate Securities Group Mortgage Others Total 





Provision for 

1,156 –19 2,011 95 214 444 –768 3,133 



–150 – –1,068 – – –103 – –1,321 

after provisioning 1,006 –19 943 95 214 341 –768 1,812 


Net result on 

809 508 606 229 – –32 – 2,120 

hedge accounting – – –3 – 26 –79 – –56 



– –6 120 500 –25 12 –57 544 

and securities portfolio 1 –6 –15 –7 24 128 –136 –11 

Other operating result 24 17 93 4 – 22 778 938 

Income 1,840 494 1,744 821 239 392 –183 5,347 

Operating expenses 1,787 481 1,291 1,117 70 111 298 5,155 



53 13 453 –296 169 281 –481 192 

of goodwill 


– 86 5 – – 12 5 108 


Restructuring 

– 247 – – – – – 247 

expenses 97 10 8 52 – – 42 209 

Pre-tax profit –44 –330 440 –348 169 269 –528 –372 

Average equity tied up 


1,644 799 5,339 1,302 168 1,931 688 11,871 

on equity (%) 


3.2 1.6 8.5 –22.7 100.6 14.6 • 1.6 

operating business (%) 

Return on equity of 

89.8 97.4 45.9 136.1 29.3 22.4 • 77.3 

pre-tax profit (%) –2.7 –41.3 8.2 –26.7 100.6 13.9 • –3.1 

Staff (average no.) 12,159 2,252 9,614 1,510 83 657 10,175 36,450

118 NOTES 

Quarterly results, by segment 

1 st quarter 2003 Retail Asset Corporate Securities Group Mortgage Others Total 





Provision for 

267 –3 426 17 109 33 –144 705 



–44 – –205 – – –3 – –252 

after provisioning 223 –3 221 17 109 30 –144 453 


Net result on 

240 91 172 36 0 –4 –15 520 

hedge accounting – 2 – – 3 5 – 10 



1 3 6 232 –17 7 –1 231 

and securities portfolio 1 9 41 1 35 25 –7 105 

Other operating result –2 2 29 1 – – 2 32 

Income 463 104 469 287 130 63 –165 1,351 

Operating expenses 430 89 317 242 13 7 81 1,179 



33 15 152 45 117 56 –246 172 

of goodwill 


– 21 2 – – 6 1 30 


Restructuring 

– – – – – – – – 

expenses – 8 25 34 – – 37 104 

Pre-tax profit 33 –14 125 11 117 50 –284 38

NOTES 119 

2 nd quarter 2003 Retail Asset Corporate Securities Group Mortgage Others Total 





Provision for 

265 –2 395 17 61 95 –85 746 



–44 – –256 – – –3 – –303 



Net result on 

227 93 181 18 – –3 – 516 

hedge accounting – –1 1 – –1 16 – 15 



1 4 47 226 –12 -25 37 278 

and securities portfolio 2 3 24 – 3 9 13 54 

Other operating result 26 3 5 –7 – –1 3 29 

Income 477 100 397 254 51 88 –32 1,335 




84 16 109 17 29 80 –141 194 

of goodwill 


– 21 2 – – 5 2 30 


Restructuring 

– – – – – – – – 

expenses – – – – – – – – 

Pre-tax profit 84 –5 107 17 29 75 –143 164

120 NOTES 

3 rd quarter 2003 Retail Asset Corporate Securities Group Mortgage Others Total 





Provision for 

278 –10 386 13 55 67 –127 662 



–44 – –219 – – –10 – –273 

after provisioning 234 -10 167 13 55 57 –127 389 


Net result on 

225 107 167 20 -1 –2 –7 509 

hedge accounting – – –1 – –1 14 – 12 



2 3 –20 124 30 –35 3 107 

and securities portfolio – 5 –23 4 –2 30 50 64 

Other operating result –11 2 18 1 – – 88 98 

Income 450 107 308 162 81 64 7 1,179 




71 42 –3 –56 68 55 –76 101 

of goodwill 


– 21 2 – – 5 1 29 


Restructuring 

– – – – – – 2,325 2,325 

expenses – – – – – – – – 

Pre-tax profit 71 21 –5 –56 68 50 –2,402 –2,253

NOTES 121 

4 th quarter 2003 Retail Asset Corporate Securities Group Mortgage Others Total 





Provision for 

265 –2 389 15 13 78 –95 663 



–27 – –205 – – –24 – –256 



Net result on 

219 145 206 22 – –3 2 591 

hedge accounting – – – – -2 5 – 3 



– 2 –3 201 7 –74 –12 121 

and securities portfolio 2 –5 13 5 –4 78 –21 68 

Other operating result – –16 12 –11 – –1 31 15 

Income 459 124 412 232 14 59 –95 1,205 




70 17 97 –3 6 51 –146 92 

of goodwill 


– 14 3 1 – 2 1 21 


Restructuring 

– – – – – – – – 

expenses – – – – – – – – 

Pre-tax profit 70 3 94 –4 6 49 –147 71

122 NOTES 

Results, by geographical market 

Assignment to the respective segments on the basis of the seat of the branch or consolidated company produces the 

following breakdown: 

2003 financial year Europe America Asia Other Total 

including countries 

7 m Germany 

Net interest income 2,470 244 52 10 2,776 

Provision for possible loan losses –986 –94 –4 – –1,084 

Net interest income after provisioning 1,484 150 48 10 1,692 

Net commission income 1,920 135 78 3 2,136 

Hedging result 40 5 –6 1 40 



and securities portfolio 

715 9 12 1 737 

(available for sale) 260 31 – – 291 

Operating expenses 4,246 176 84 5 4,511 

Other operating result 147 27 1 –1 174 

Operating profit 320 181 49 9 559 

Risk-weighted assets according to BIS 1) 123,112 9,316 2,751 650 135,829 

1) excluding market risk 

In the previous year, we achieved the following results in the geographical markets: 

2002 financial year Europe America Asia Other Total 

including countries 

7 m Germany 

Net interest income 2,596 379 147 11 3,133 

Provision for possible loan losses 1,263 –77 19 – –1,321 

Net interest income after provisioning 1,333 302 166 11 1,812 

Net commission income 1,892 142 82 4 2,120 

Hedging result –53 –3 – – –56 



and securities portfolio 

513 19 12 – 544 

(available for sale) –16 7 –2 – –11 

Operating expenses 4,723 278 150 4 5,155 

Other operating result 925 17 –4 – 938 

Operating profit –129 206 104 11 192 

Risk-weighted assets according to BIS 1) 137,886 13,899 4,140 615 156,540 

1) excluding market risk

Notes to the balance sheet 

(44) Cash reserve 

We include the following items in the cash reserve: 

NOTES 123 

31.12.2003 31.12.2002 Change 

7 m 7 m in % 

Cash on hand 917 898 2.1 

Balances with central banks 

Debt issued by public-sector borrowers, and 

4,794 5,714 –16.1 

bills of exchange rediscountable at central banks 

Treasury bills and discountable treasury notes, 

1,718 1,854 –7.3 

as well as similar debt issues by public-sector borrowers 1,383 1,511 –8.5 

Bills of exchange 335 343 –2.3 

Total 7,429 8,466 –12.2 

The balances with central banks include claims on the Bundesbank totalling 73,744m (previous year: 74,371m). The 

minimum reserve requirement to be met at end-December 2003 amounted to 71,964m (previous year: 72,166m). 

(45) Claims on banks 

total due on demand other claims 

31.12.2003 31.12.2002 Change 31.12.2003 31.12.2002 31.12.2003 31.12.2002 

7 m 7 m in % 7 m 7 m 7 m 7 m 

German banks 18,868 22,226 –15.1 5,437 3,111 13,431 19,115 

Foreign banks 32,789 32,117 2.1 11,536 10,685 21,253 21,432 

Total 51,657 54,343 –4.9 16,973 13,796 34,684 40,547 

The claims on banks include 75,342m of public-sector loans (previous year: 76,560m) extended by the mortgage banks. 

(46) Claims on customers 

The claims on customers break down as follows: 

31.12.2003 31.12.2002 Change 

7 m 7 m in % 

Claims on domestic customers 96,364 95,843 0.5 

Claims on foreign customers 42,074 52,671 –20.1 

Total 138,438 148,514 –6.8 

The claims on customers include 726,855m (previous year: 725,718) of loans secured by mortgages or other security 

interests in real property as well as 719,597m (previous year: 719,174m) of public-sector credits.

124 NOTES 

(47) Claims on and liabilities to subsidiaries and equity investments 

The claims on and liabilities to unconsolidated subsidiaries, associated companies and companies in which an equity 

investment exists are as follows: 

(48) Total lending 

31.12.2003 31.12.2002 Change 

7 m 7 m in % 

Loans to banks 1) 10,759 10,223 5.2 

Claims on customers 1) 130,692 139,522 –6.3 

Bills discounted 338 347 –2.6 

Claims not originated by the Bank 2) 22,918 21,379 7.2 

Total 164,707 171,471 –3.9 

1) excluding reverse repos; 2) included in Investments and securities portfolio 

31.12.2003 31.12.2002 Change 

7 m 7 m in % 

Claims on banks 1,208 954 26.6 

Subsidiaries 

Associated companies and companies 

14 18 –22.2 

in which an equity investment exists 1,194 936 27.6 

Claims on customers 288 304 –5.3 

Subsidiaries 


239 234 2.1 

in which an equity investment exists 49 70 –30.0 

Bonds, notes and other fixed-income securities 1,620 932 73.8 

Subsidiaries 


28 30 –6.7 

in which an equity investment exists 1,592 902 76.5 

Shares and other variable-yield securities 


319 358 –10.9 


Total 3,435 2,548 34.8 

Liabilities to banks 46 71 –35.2 

Subsidiaries 


3 2 50.0 


Liabilities to customers 840 47 • 

Subsidiaries 826 34 • 


in which an equity investment exists 14 13 7.7 

Total 886 118 • 

We distinguish loans to banks from claims on banks such that only those claims are shown as loans to banks for which 

special loan agreements have been concluded with the borrowers. Therefore, interbank money-market transactions, for 

example, do not count as loans to banks.


1) including provisions 

NOTES 125 

Provision for possible loan losses is made in accordance with rules that apply Group-wide and covers all discernible 

creditworthiness and country risks. On the basis of past experience, we have formed global valuation allowances for the 

latent credit risk. 

Individual Country Global Total 

valuation valuation valuation 

allowances1) allowances allowances 

2003 2002 2003 2002 2003 2002 2003 2002 Change 

7 m 7 m 7 m 7 m 7 m 7 m 7 m 7 m in % 

As of 1.1. 5,320 5,402 71 134 314 410 5,705 5,946 –4.1 

Allocations 1,492 1,927 14 10 56 37 1,562 1,974 –20.9 

Deductions 1,217 1,388 34 55 45 27 1,296 1,470 –11.8 

utilized 698 760 1 20 – – 699 780 –10.4 

reversals 

Changes in conso- 

519 628 33 35 45 27 597 690 –13.5 

lidated companies 

Exchange-rate 

7 –449 – – 0 –101 7 –550 • 

changes/transfers 

Provision for possible 

–96 –172 –3 –18 –25 –5 –124 –195 –36.4 

loan losses as of 31.12. 5,506 5,320 48 71 300 314 5,854 5,705 2.6 

With direct write-downs and income received on written-down claims taken into account, the allocations and reversals 

reflected in the income statement gave rise to provision of 71,084m (previous year: 71,321m) for lending risks. 

Provision for possible risks was formed for: 

31.12.2003 31.12.2002 Change 

7 m 7 m in % 

Claims on banks 39 83 –53.0 

Claims on customers 5,471 5,293 3.4 

Provision to cover balance-sheet items 5,510 5,376 2.5 

Guarantees, endorsement liabilities, credit commitments 344 329 4.6 

Total 5,854 5,705 2.6 

After conservatively valued security in an amount of 71,857m had been deducted, the value-adjusted claims producing 

neither interest nor income amounted to 75,220m.

126 NOTES 

The provision for credit risk breaks down as follows: 

Individual valuation Loan losses1) Net allocation2) to 

allowances and in 2003 valuation allowances 

provisions for and provisions in 

7 m lending business lending business 

German customers 4,711 415 752 

Companies and self-employed 4,005 384 675 

Manufacturing 815 77 167 

Construction 298 9 30 

Distributive trades 499 64 73 

Services, incl. professions, and others 2,393 234 405 

Other retail customers 706 31 77 

Foreign customers 795 428 221 

Banks 25 5 –1 

Corporate and retail customers 770 423 222 

Total 5,506 843 973 

1) Direct write-downs, utilized individual valuation allowances and provisions in lending business 

2) Allocation less reversals 

Data on provision for credit risk: 

in % 2003 2002 

Allocation ratio 1) 0.66 0.77 

Write-off ratio 2) 0.50 0.48 

Cover ratio 3) 3.55 3.33 

1) Net provisioning (new provisions less reversals of valuation allowances and provision for both commercial and country loans and also 

general provision, plus the balance of direct write-downs and income received on previously written-down claims) as a percentage of 

total lending 

2) Defaults (utilized valuation allowances and provision for both commercial and country loans, plus the balance of direct write-downs and 

income received on previously written-down claims) as a percentage of total lending 

3) Existing provisions (level of valuation allowances and provisions for credit risk in commercial lending, country risk and in general provision) 

as a percentage of total lending

(50) Positive fair values from derivative hedging instruments 

Derivative instruments used for hedging purposes and for 

hedge accounting and also showing a positive fair value 

appear under this item in the balance sheet. 

(51) Assets held for dealing purposes 

The Group’s trading activities include trading in bonds, 

notes and other fixed-income securities, shares and other 

variable-yield securities, promissory notes, foreign exchange 

and precious metals as well as derivative financial 

instruments. All the items in the trading portfolio are 

shown at their fair value. 

NOTES 127 

These instruments are measured at their fair value. 

For the most part, interest-rate and interest-rate/currency 

swaps are used. 

31.12.2003 31.12.2002 Change 

7 m 7 m in % 

Positive fair values from related effective fair value hedges 1,649 2,110 –21.8 

Positive fair values from related effective cash flow hedges 903 1,021 –11.6 

Total 2,552 3,131 –18.5 

The positive fair values also include financial instruments 

which cannot be used as hedging instruments in 

hedge accounting. 

31.12.2003 31.12.2002 Change 

7 m 7 m in % 

Bonds, notes and other fixed-income securities 19,099 35,148 –45.7 

Money-market instruments 1,020 983 3.8 

issued by public-sector borrowers 212 359 –40.9 

issued by other borrowers 808 624 29.5 

Bonds and notes 18,079 34,165 –47.1 

issued by public-sector borrowers 5,478 20,916 –73.8 

issued by other borrowers 12,601 13,249 –4.9 

Shares and other variable-yield securities 8,510 5,412 57.2 

Promissory notes held in the trading portfolio 559 515 8.5 

Positive fair values attributable to derivative financial instruments 59,460 76,117 –21.9 

Currency-based transactions 11,142 9,721 14.6 

Interest-based transactions 44,544 59,197 –24.8 

Other transactions 3,774 7,199 –47.6 

Total 87,628 117,192 –25.2 

725,197m (previous year: 735,550m) of the bonds, notes and other fixed-income securities and also shares and other 

variable-yield securities were listed securities.

128 NOTES 

(52) Investments and securities portfolio 

The Investments and securities portfolio consists of 

claims not originated by the Bank, all bonds, notes and 

other fixed-income securities, shares and other variableyield 

securities not held for trading purposes, as well 

as investments, holdings in associated companies measured 

at equity and holdings in subsidiaries not included 

in the consolidation. 

31.12.2003 31.12.2002 Change 

7 m 7 m in % 

Claims on banks and customers not originated by the Bank 22,918 21,379 7.2 

Bonds, notes and other fixed-income securities 56,311 53,400 5.5 

Money-market instruments 987 431 • 

issued by public-sector borrowers 418 74 • 

issued by other borrowers 569 357 59.4 

Bonds and notes 55,324 52,969 4.4 

issued by public-sector borrowers 26,975 26,878 0.4 

issued by other borrowers 28,349 26,091 8.7 

Shares and other variable-yield securities 2,013 1,999 0.7 

Investments 3,783 3,629 4.2 

of which: in banks 2,353 1,999 17.7 

Investments in associated companies 2,300 3,584 –35.8 

of which: in banks 2,163 3,250 –33.4 

Holdings in subsidiaries 517 567 –8.8 

of which: in banks 7 60 –88.3 

Total 87,842 84,558 3.9 

of which: measured at amortized cost 1,320 1,609 –18.0 

Fair values of listed financial investments: 

31.12.2003 31.12.2002 

7 m Fair value Fair value 

Bonds, notes and other fixed-income securities 50,609 49,139 

Shares and other variable-yield securities 864 811 

Investments and investments in associated companies 5,280 5,815 

Total 56,753 55,765

NOTES 129 

Investments in large incorporated companies held by the Commerzbank Group, pursuant to Art. 313, (2), no. 4, HGB: 

Name Seat Percentage share 

of capital held 

31.12.2003 31.12.2002 

Al Wataniya Casablanca 9.0 9.0 

Banque Marocaine du Commerce Extérieur, S.A. Casablanca 5.0 10.0 

Buderus Aktiengesellschaft Wetzlar – 10.5 

Heidelberger Druckmaschinen Aktiengesellschaft Heidelberg 10.0 10.0 

Holsten-Brauerei Aktiengesellschaft Hamburg – 7.2 

Korea Exchange Bank Seoul 14.8 32.6 

Linde Aktiengesellschaft Wiesbaden 10.0 10.0 

MAN Aktiengesellschaft Munich 6.8 6.8 

Sachsenring Automobiltechnik AG i.L. Zwickau 7.9 1) 10.0 

Unibanco – União de Bancos Brasileiros S.A. São Paulo 5.1 2) – 

Unibanco Holdings S.A. São Paulo – 11.5 

Willy Vogel Beteiligungsgesellschaft mbH Berlin 19.0 19.0 

1) as of 31.12.2003, the company was no longer a large incorporated company 

2) directly and indirectly held 

(53) Intangible assets 

31.12.2003 31.12.2002 Change 

7 m 7 m in % 

Goodwill 690 1,040 –33.7 

Other intangible assets 112 111 0.9 

Total 802 1,151 –30.3 

Using the straight-line method, we amortize goodwill 

over the probable useful economic lifetime of 15 years. 

Further goodwill arising from companies shown at 

equity is contained in investments in associated companies 

(7108m). 

(54) Fixed assets 

Of the other intangible assets, capitalized software 

produced in-house accounted for 7100m (previous year: 

790m). 

31.12.2003 31.12.2002 Change 

7 m 7 m in % 

Land and buildings 877 709 23.7 

Office furniture and equipment 1,010 1,417 –28.7 

Leased equipment 176 379 –53.6 

Total 2,063 2,505 –17.6

130 NOTES 

(55) Changes in book value of fixed assets and investments 

The following changes were registered for intangible and fixed assets, and also for investments, investments in associated 

companies and subsidiaries in the past financial year: 

Intangible assets Fixed assets 

Goodwill Other Land and Office 

intangible buildings furniture and 

7 m assets equipment 

Book value as of 1.1.2003 

Cost of acquisition/manufacture 

1,040 111 709 1,417 

as of 1.1.2003 1,597 178 867 3,725 

Additions in 2003 41 27 29 99 

Disposals in 2003 

Transfers/changes in 

215 9 27 285 

consolidated companies 


– 7 211 –13 

as of 31.12.2003 1,423 203 1,080 3,526 

Cumulative write-downs as of 31.12.2002 557 67 158 2,308 

Changes in exchange rates – – –5 –18 

Additions in 2003 410 30 19 426 



215 9 4 187 

consolidated companies –19 3 35 –13 

Cumulative write-downs as of 31.12.2003 733 91 203 2,516 

Book value as of 31.12.2003 690 112 877 1,010 

Fixed assets Investments Investments Holdings in 

Leased in associated subsidiaries 

7 m equipment companies 

Book value as of 1.1.2003 


379 3,629 3,584 567 

as of 1.1.2003 435 4,406 3,750 604 

Additions in 2003 121 45 – 4 



358 1,517 101 21 

consolidated companies 

Cumulative changes arising from 

– 395 –629 –33 

measurement at fair value or at equity 

Cost of acquisition/manufacture/fair value 

– 1,576 –91 – 

as of 31.12.2003 198 4,905 2,929 554 

Cumulative write-downs as of 31.12.2002 56 785 166 37 

Additions in 2003 17 856 571 – 



51 519 – – 

consolidated companies – – –108 – 

Cumulative write-downs as of 31.12.2003 22 1,122 629 37 

Book value as of 31.12.2003 176 3,783 2,300 517

(56) Tax assets 

NOTES 131 

31.12.2003 31.12.2002 Change 

7 m 7 m in % 

Current tax assets 270 704 –61.6 

Germany 203 607 –66.6 

Abroad 67 97 –30.9 

Deferred tax assets 5,768 5,291 9.0 

Deferred tax assets 5,768 5,291 9.0 

Total 6,038 5,995 0.7 

Deferred taxes represent the potential income-tax relief 

from temporary differences between the values assigned 

to assets and liabilities in the consolidated balance sheet 

in accordance with IAS and their values for tax-accounting 

purposes in accordance with the local tax regulations for 

consolidated companies. 

Deferred tax assets were formed in connection with the following balance-sheet items: 

No deferred taxes have been recognized for loss carryforwards 

of 73,084m (previous year: 72,796m), as it is 

uncertain at present whether they will be realized. 

For the most part, there are no time limits on the use of 

the existing tax loss carry-forwards. 

31.12.2003 31.12.2002 Change 

7 m 7 m in % 

Fair values of derivative hedging instruments 2,567 2,050 25.2 

Assets held for dealing purposes and liabilities from dealing activities 2,130 1,537 38.6 

Claims on banks and customers 103 139 –25.9 

Provisions 118 318 –62.9 

Securitized liabilities 34 287 –88.2 

Liabilities to banks and customers 19 148 –87.2 

Sundry balance-sheet items 425 470 –9.6 

Capitalized tax loss carry-forwards 372 342 8.8 

Total 5,768 5,291 9.0 

(57) Other assets 

Other assets mainly comprise the following items: 

31.12.2003 31.12.2002 Change 

7 m 7 m in % 

Collection items 385 284 35.6 

Precious metals 464 373 24.4 

Sundry assets, including deferred items 1,797 998 80.1 

Total 2,646 1,655 59.9

132 NOTES 

(58) Liabilities to banks 

total 

31.12.2003 31.12.2002 Change 

7 m 7 m in % 

German banks 41,015 42,893 –4.4 

Foreign banks 54,234 72,091 –24.8 

Total 95,249 114,984 –17.2 

of which: due on demand other liabilities 

31.12.2003 31.12.2002 31.12.2003 31.12.2002 

7 m 7 m 7 m 7 m 

German banks 6,407 3,608 34,608 39,285 

Foreign banks 11,034 9,500 43,200 62,591 

Total 17,441 13,108 77,808 101,876 

(59) Liabilities to customers 

Liabilities to customers consist of savings deposits, demand deposits and time deposits, including savings certificates. 

total 

31.12.2003 31.12.2002 Change 

7 m 7 m in % 

German customers 73,601 69,539 5.8 

Corporate customers 43,313 37,708 14.9 

Retail customers and others 27,243 28,245 –3.5 

Public sector 3,045 3,586 –15.1 

Foreign customers 26,399 26,161 0.9 

Corporate and retail customers 25,876 23,631 9.5 

Public sector 523 2,530 –79.3 

Total 100,000 95,700 4.5

Savings deposits Other liabilities 

NOTES 133 

due on demand with agreed lifetime 

or period of notice 

7 m 31.12.2003 31.12.2002 31.12.2003 31.12.2002 31.12.2003 31.12.2002 

German customers 11,180 11,035 26,932 26,857 35,489 31,647 

Corporate customers 44 41 17,444 16,782 25,825 20,885 

Retail customers and others 11,130 10,989 8,927 9,684 7,186 7,572 

Public sector 6 5 561 391 2,478 3,190 

Foreign customers 

Corporate and 

1,093 1,038 7,362 6,251 17,944 18,872 

retail customers 1,092 1,037 7,213 6,072 17,571 16,522 

Public sector 1 1 149 179 373 2,350 

Total 12,273 12,073 34,294 33,108 53,433 50,519 

Savings deposits break down as follows: 

31.12.2003 31.12.2002 Change 

7 m 7 m in % 

Savings deposits with agreed period of notice of three months 

Savings deposits with agreed period of notice 

11,556 11,262 2.6 

of more than three months 717 811 –11.6 

Total 12,273 12,073 1.7 

(60)Securitized liabilities 

Securitized liabilities consist of bonds and notes, including mortgage and public-sector Pfandbriefe, money-market 

instruments (e.g. certificates of deposit, Euro-notes, commercial paper), index certificates, own acceptances and promissory 

notes outstanding. 

total of which: issued by 

mortgage banks 

31.12.2003 31.12.2002 31.12.2003 31.12.2002 

7 m 7 m 7 m 7 m 

Bonds and notes outstanding 71,100 74,905 53,433 53,967 

Money-market instruments outstanding 12,680 17,502 5,180 1,477 

Own acceptances and promissory notes outstanding 212 325 – – 

Total 83,992 92,732 58,613 55,444 

The nominal interest paid on money-market paper ranges 

from 0.18% to 21.0% (previous year: 0.10% to 29.1%); 

for bonds and notes, from 0.05% to 32.0% (previous 

year: 0.05% to 32.0%). The original maturity periods for 

money-market paper may be up to one year. 744bn (previous 

year: 754bn) of the bonds and notes have an original 

lifetime of more than four years.

134 NOTES 

The following table presents the most important bonds and notes issued in 2003: 

Equivalent Currency Issuer Interest rate Maturity 

in 7 m % date 

2,200 EUR Hypothekenbank in Essen AG 3.500 2008 





767 EUR Hypothekenbank in Essen AG 6.500 2005 



385 CHF Erste Europäische Pfandbrief und Kommunalkreditbank AG 0.266 2006 


289 CHF Erste Europäische Pfandbrief und Kommunalkreditbank AG 1.750 2007 

283 GBP Commerzbank AG 3.940 2004 











250 EUR Erste Europäische Pfandbrief und Kommunalkreditbank AG 2.105 2004 

(61) Negative fair values from derivative hedging instruments 

Derivative instruments not serving trading purposes but 

used for effective hedging and showing a negative fair 

value appear under this item in the balance sheet. 

These financial instruments are measured at their fair 

value. For the most part, interest-rate and interest-rate/ 

currency swaps are used as hedging instruments. 

31.12.2003 31.12.2002 Change 

7 m 7 m in % 

Negative fair values from related effective fair value hedges 3,211 3,546 –9.4 

Negative fair values from related effective cash flow hedges 2,721 2,150 26.6 

Total 5,932 5,696 4.1

(62) Liabilities from dealing activities 

(63) Provisions 

Provisions break down as follows: 

NOTES 135 

In Liabilities from dealing activities, the negative fair values of financial derivative instruments not employed as hedging 

instruments in connection with hedge accounting are shown. Delivery commitments arising from short sales of securities 

are also included under Liabilities from dealing activities. 

31.12.2003 31.12.2002 Change 

7 m 7 m in % 

Provisions for pensions and similar commitments 1,432 1,516 –5.5 

Other provisions 1,875 2,012 –6.8 

Total 3,307 3,528 –6.3 

The changes in provisions for pensions were as follows: 

as of Pension Allocation Fair value Transfers/changes as of 

1.1.2003 payments of plan in consolidated 31.12.2003 

7 m assets companies 

Pension expectancies of 

active and former employees 

and also pensioners 1,444 75 125 96 4 1,402 

Early retirement 

Part-time scheme 

30 14 8 – – 24 

for older staff 42 9 16 43 – 6 

Total 1,516 98 149 139 4 1,432 

For the most part, provisions for pensions and similar 

commitments represent provisions for commitments to 

pay company retirement pensions on the basis of direct 

pledges of benefits. The type and scale of the retirement 

pensions for employees entitled to benefits are determined 

by the terms of the pension arrangement that 

31.12.2003 31.12.2002 Change 

7 m 7 m in % 

Currency-based transactions 11,761 10,978 7.1 

Interest-based transactions 43,058 58,982 –27.0 

Delivery commitments arising from short sales of securities 8,389 8,131 3.2 

Sundry transactions 3,806 5,147 –26.1 

Total 67,014 83,238 –19.5 

The assets of 7139m invested in a pension fund were deducted in the 2003 financial year from the provisions for pensions 

and similar commitments. A year previously, no allocation had yet been made to this pension fund. 

finds application (including pension guidelines, pension 

scheme, contribution-based pension plan, individual pension 

commitments), which mainly depends upon when 

the employee joined the Bank. On this basis, pensions are 

paid to employees reaching retirement age, or earlier in 

the case of invalidity or death (see also Note 22).

136 NOTES 

Changes in the assets held in trust at Commerzbank Pension Trust e.V., which count as plan assets pursuant to IAS 19: 

7 m 2003 

– Allocation to plan assets as of November 1, 2003 138 

– Income from plan assets 1 

Fair value of plan assets 139 

The pension commitments are worked out annually by an 

independent actuary, applying the projected unit credit 

method. 

The projected unit credit for pension commitments 

as of December 31, 2003, was 71,644m (previous year: 

Changes in Other provisions: 

as of Utilized Reversals Allocation/changes as of 

1.1.2003 in consolidated 31.12.2003 

7 m companies 

Personnel area 529 368 12 403 552 

Restructuring measures 285 117 13 54 209 

Risks in lending 329 16 79 110 344 

Bonuses for special savings schemes 116 116 0 94 94 

Legal proceedings and recourse claims 95 44 13 33 71 

Sundry items 658 217 46 210 605 

Total 2,012 878 163 904 1,875 

The provisions in the personnel area basically relate to 

provisions for various types of bonuses, to be paid to 

employees of the Group in the first quarter of 2004. An 

amount of 754m was allocated to the provisions for the 

71,576m). The difference between this figure and the pension 

provisions is the result of changes in the actuarial 

parameters and the bases of calculation amounting to 

773m (previous year: 760m) and of the fair value of the 

plan assets of 7139m. 

The allocation to provisions for pension schemes to which the Bank contributes breaks down as follows: 

2003 2002 

7 m 7 m 

– Service cost 35 40 

– Interest cost 90 91 

– Cost of early retirement and part-time scheme for older staff 24 39 

Allocations to provisions for schemes to which the Bank contributes 149 170 

restructuring measures – second cost-cutting offensive – 

introduced and announced in the 2003 financial year. The 

allocated amount is included in Restructuring expenses in 

the income statement.

(64) Tax liabilities 

(65) Other liabilities 

Other liabilities break down as follows: 

NOTES 137 

31.12.2003 31.12.2002 Change 

7 m 7 m in % 

Current income-tax liabilities 154 278 –44.6 

Income-tax liabilities to tax authorities 1 3 –66.7 

Provisions for income taxes 153 275 –44.4 

Deferred income-tax liabilities 4,341 3,386 28.2 

Deferred taxes carried as liabilities 4,341 3,386 28.2 

Total 4,495 3,664 22.7 

Provisions for taxes on income are possible tax liabilities 

for which no final formal assessment note has been received. 

The liabilities to tax authorities represent payment 

obligations from current taxes towards German and foreign 

tax authorities. Deferred taxes on the liabilities side 

represent the potential income-tax burden from tempo- 

Deferred income-tax liabilities were formed in connection with the following items: 

rary differences between the values assigned to assets 

and liabilities in the consolidated balance sheet in accordance 

with IAS and their values for tax-accounting purposes 

in accordance with the local tax regulations for consolidated 

companies. 

31.12.2003 31.12.2002 Change 

7 m 7 m in % 

Assets held for dealing purposes and liabilities from dealing activities 1,270 777 63.4 

Fair values of derivative hedging instruments 1,783 885 • 

Investments and securities portfolio 795 1,276 –37.7 

Claims on banks and customers 290 259 12.0 

Liabilities to banks and customers 21 8 • 

Sundry balance-sheet items 182 181 0.6 

Total 4,341 3,386 28.2 

31.12.2003 31.12.2002 Change 

7 m 7 m in % 

Deferred interest expenses for subordinated capital 295 324 –9.0 

Effects of measuring hedged subordinated capital items (IAS 39) 735 820 –10.4 

Sundry liabilities, including deferred items 1,881 2,141 –12.1 

Total 2,911 3,285 –11.4

138 NOTES 

(66) Subordinated capital 

Subordinated capital breaks down as follows: 

31.12.2003 31.12.2002 Change 

7 m 7 m in % 

Subordinated liabilities 5,958 6,845 –13.0 

of which: tier-III capital as defined in Art. 10, (7), KWG 125 774 –83.9 

of which: maturing within two years 617 974 –36.7 

Profit-sharing certificates outstanding 2,423 2,392 1.3 

of which: maturing within two years 522 266 96.2 

Total 8,381 9,237 –9.3 

In order to meet the regulatory requirements regarding 

such subordinated liabilities, we have shown the effects 

of measuring hedged items in accordance with IAS 39, 

and also the deferred interest payments for such transactions, 

separately under Other liabilities. 

At end-2003, the following major subordinated liabilities were outstanding: 

Subordinated liabilities are liable funds as defined in 

Art. 10, (5a), KWG. The claims of creditors to repayment 

of these liabilities are subordinate to those of other creditors. 

The issuers cannot be obliged to make premature 

repayment. In the event of insolvency or winding-up, subordinated 

liabilities may only be repaid after the claims of 

all senior creditors have been met. 

Start of maturity 7 m Currency in m Issuer Interest rate Maturity date 

2000 590 590 EUR Commerzbank AG 6.500 2010 



1997 284 200 GBP Commerzbank AG 7.875 2007 




1999 213 150 GBP Commerzbank AG 6.625 2019 

In the year under review, the interest paid by the Group for subordinated liabilities totalled 7375m (previous year: 

7432m). This includes 7138m (previous year: 7151m) of deferred interest expenses for interest due but not yet paid. 

This is shown under Other liabilities.

Profit-sharing certificates outstanding form part of the 

Bank’s liable equity capital in accordance with the provisions 

of the German Banking Act (Art. 10, (5), KWG). They 

are directly affected by current losses. Interest payments 

At end-2003, the following major subordinated profit-sharing certificates were outstanding: 

NOTES 139 

are made solely if the issuing institution achieves a distributable 

profit. The claims of holders of profit-sharing 

certificates to a repayment of principal are subordinate to 

those of other creditors. 

Start of maturity 7 m Issuer Interest rate Maturity date 

1993 409 Commerzbank AG 7.250 2005 






Interest to be paid on the profit-sharing certificates outstanding for the 2003 financial year amounts to 7175m (previous 

year: 7191m). Under Other liabilities, 7157m (previous year: 7173m) has been shown. 

(67) Hybrid capital 

As in previous years, the Commerzbank Group raised no hybrid capital in the 2003 financial year.

140 NOTES 

(68) Equity structure 

31.12.2003 31.12.2002 

7 m 7 m 

a) Subscribed capital 1,545 1,378 

b) Capital reserve 4,475 6,131 

c) Retained earnings 3,286 3,268 

d) Revaluation reserve 1,240 –769 

e) Measurement of cash flow hedges –1,236 –1,248 

f) Reserve from currency translation –219 –6 

g) Consolidated profit 0 54 

Equity 9,091 8,808 

a) Subscribed capital 

The subscribed capital (share capital) of Commerzbank Aktiengesellschaft is divided into no-par-value shares, each with 

a notional value of 72.60. The shares are issued in the form of bearer shares. 

1,000 units 

Number of shares outstanding on 1.1.2003 529,944 

plus: treasury shares on 31.12. of the previous year 12,263 

Capital increase 53,334 

Issue of shares to employees 2,317 

Number of shares issued on 31.12.2003 597,858 

less: treasury shares on balance-sheet date 3,490 

Number of shares outstanding on 31.12.2003 594,368 

Before treasury shares are deducted, the subscribed capital 

stands at 71,554m. 

The value of issued, outstanding and authorized shares is as follows: 

No preferential rights exist or restrictions on the payment 

of dividends at Commerzbank AG. All the issued 

shares have been fully paid in. 

31.12.2003 31.12.2002 

7 m 1,000 units 7 m 1,000 units 

Shares issued 1,554 597,858 1,410 542,207 

– Treasury shares 9 3,490 32 12,263 

= Shares outstanding (subscribed capital) 1,545 594,368 1,378 529,944 

+ Shares not yet issued from authorized capital 349 134,054 493 189,705 

Total 1,894 728,422 1,871 719,649 

The number of authorized shares is 731,912 thousand 

units (previous year: 731,912 thousand units). The amount 

represented by authorized shares is 71,903m (previous 

year: 71,903m). 

As of December 31, 2003, 6,574 thousand shares (previous 

year: 7,891 thousand shares) had been pledged with 

the Group as security. This represents 1.1% (previous year: 

1.5%) of the shares outstanding on the balance-sheet date.

) Capital reserve 

In the capital reserve, premiums from the issue of shares 

are shown. In addition, the capital reserve contains 

amounts which were realized for conversion and option 

rights entitling holders to purchase shares when bonds 

and notes were issued. 

The Group’s capital reserve is the amount shown 

for Commerzbank AG, less the treasury shares held. The 

values represented by subsidiaries in the capital reserve 

are eliminated as part of the consolidation of capital 

accounts or appear as minority interests. The net loss for 

the year of 72,320m shown as of December 31, 2003, was 

offset against the capital reserve. 

Transaction costs of 718.2m were incurred in connection 

with the capital increase. These were recognized as a 

deduction item upon transfer to the capital reserve. 

c) Retained earnings 

Retained earnings consist of the legal reserve and other 

reserves. The legal reserve contains those reserves which 

have to be formed in accordance with national law; in the 

individual financial statements, the amounts assigned to 

this reserve may not be distributed. The overall amount of 

retained earnings shown in the balance sheet consists of 

73m of legal reserves (previous year: 73m) and 73,283m 

(previous year: 73,265m) of other revenue reserves. 

d) Revaluation reserve 

NOTES 141 

The results of measuring the investments and securities 

portfolio – consisting of interest-bearing and dividendbased 

instruments – at fair value, with deferred taxes 

taken into consideration, are assigned to the revaluation 

reserve. Gains or losses appear in the income statement 

only when the asset has been disposed of or written off. 

e) Measurement of cash flow hedges 

The result of measuring effective hedges used in cash 

flow hedges appears, after deferred taxes have been 

taken into consideration, under this equity item. 

f) Reserve from currency translation 

The reserve from currency translation relates to translation 

gains and losses arising through the consolidation 

of capital accounts. Here exchange-rate differences are 

included that arise through the consolidation of subsidiaries 

and associated companies.

142 NOTES 

(69) Conditional capital 

Conditional capital is intended to be used for the issue of convertible bonds or bonds with warrants and also of profitsharing 

certificates with conversion or option rights. 

Changes in the Bank’s conditional capital: 

Date of Conditional Additions Conditional of which: 

resolution capital capital used avai- 

1.1.2003 31.12.2003 conditional lable 

7 m capital lines 

Convertible bonds/bonds with warrants/ 

profit-sharing rights 

Convertible bonds/bonds with warrants/ 

21.5.1999 200 – 200 – 200 

profit-sharing rights 30.5.2003 – 403 403 – 403 

Total 200 403 603 – 603 

As resolved by the AGM of May 21, 1999, the Bank’s share 

capital has been conditionally increased by up to 

7200,070,000. Such conditional capital increase will only 

be effected to the extent that the holders of the convertible 

bonds, bonds with warrants or profit-sharing certificates 

carrying conversion or option rights to be issued by April 

30, 2004, by either Commerzbank Aktiengesellschaft or 

companies in which the Bank directly or indirectly holds 

a majority interest exercise their conversion or option 

rights, or the holders of the convertible bonds or profitsharing 

certificates carrying conversion rights to be 

issued by April 30, 2004, by either Commerzbank Aktiengesellschaft 

or companies in which Commerzbank 

Aktiengesellschaft directly or indirectly holds a majority 

interest meet the obligation to exercise their conversion 

rights. 

As resolved by the AGM of May 30, 2003, the Bank’s 

share capital has been conditionally increased by up to 

7403,000,000. Such conditional capital increase will only 

be effected to the extent that the holders or creditors of 

the convertible bonds, bonds with warrants or profitsharing 

rights – carrying conversion or option rights – to 

be issued by May 30, 2008, by either Commerzbank 

Aktiengesellschaft or companies in which Commerzbank 

Aktiengesellschaft directly or indirectly holds a majority 

interest (group companies as defined in Art. 18, (1), AktG) 

exercise their conversion or option rights, or the holders 

or creditors of the convertible bonds or convertible profitsharing 

rights to be issued by May 30, 2008 by either 

Commerzbank Aktiengesellschaft or companies in which 

Commerzbank Aktiengesellschaft directly or indirectly 

holds a majority interest (group companies as defined in 

Art. 18, (1), AktG) meet their obligation to exercise their 

conversion rights.

(70) Authorized capital 

NOTES 143 

Date Original Used in previous years Used in 2003 Remaining Authorization 

of AGM amount for capital increases for capital increases amount expires 

resolution 7 m 7 m 7 m 7 m 

21.05.1999 175 – – 175 30.04.2004 

21.05.1999 175 25 – 150 30.04.2004 

21.05.1999 86 12 74 – 30.04.2004 

31.05.2002 30 – 6 24 30.04.2007 

31.05.2002 65 – 65 – 30.04.2007 

Total 531 37 145 349 

The Board of Managing Directors is authorized to increase, 

with the approval of the Supervisory Board, the 

share capital of the Company by April 30, 2004 through 

the issue of no-par-value shares against cash contributions, 

in either one or several tranches, by a maximum 

amount of 7175,000,000. The Board of Managing Directors 

may, with the approval of the Supervisory Board, 

exclude shareholders’ subscription rights to the extent 

necessary to offer to the holders of conversion or option 

rights, either already issued or still to be issued by 

Commerzbank Aktiengesellschaft or its subsidiaries, subscription 

rights to the extent to which they would be entitled 

as shareholders after they have exercised their 

conversion or option rights. In addition, any fractional 

amounts of shares may be excluded from shareholders’ 

subscription rights. 

The Board of Managing Directors is authorized to 

increase, with the approval of the Supervisory Board, the 

share capital of the Company by April 30, 2004 through 

the issue of no-par-value shares against cash or contributions 

in kind, in either one or several tranches, by a maximum 

amount of 7149,563,570.80. On principle, shareholders 

are to be offered subscription rights; however, the 

Board of Managing Directors may, with the approval of 

the Supervisory Board, exclude shareholders’ subscription 

rights to the extent necessary to offer to the holders of 

conversion or option rights, either already issued or still 

to be issued by Commerzbank Aktiengesellschaft or its 

subsidiaries, subscription rights to the extent to which 

they would be entitled as shareholders after they have 

exercised their conversion or option rights. In addition, 

any fractional amounts of shares may be excluded from 

shareholders’ subscription rights. Furthermore, the Board 

of Managing Directors may, with the approval of the 

Supervisory Board, exclude shareholders’ subscription 

rights insofar as the capital increase is made against contributions 

in kind for the purpose of acquiring companies 

or holdings in companies. 

The Board of Managing Directors is authorized to increase, 

with the approval of the Supervisory Board, the 

share capital of the Bank by April 30, 2007, through the 

issue of new no-par-value shares against cash, in either 

one or several tranches, by a maximum amount of altogether 

723,976,099, thereby excluding the subscription 

rights of shareholders for the purpose of issuing these 

shares to the Bank’s staff.

144 NOTES 

(71) The Bank’s foreign-currency position 

On December 31, 2003, the Commerzbank Group had the following foreign-currency assets and liabilities (excluding fair 

values of derivatives): 

31.12.2003 31.12.2002 Change 

7 m 7 m in % 

USD JPY GBP Others Total Total 

Cash reserve 12 559 6 451 1,028 1,212 –15.2 

Claims on banks 9,570 6,861 3,543 4,138 24,112 21,535 12.0 

Claims on customers 

Assets held for 

23,914 4,782 2,800 3,983 35,479 43,098 –17.7 

dealing purposes 

Investments and 

4,608 1,446 1,952 1,423 9,429 9,463 –0.4 

securities portfolio 5,536 1,005 389 848 7,778 10,129 –23.2 

Other balance-sheet items 4,547 70 135 1,467 6,219 7,904 –21.3 

Foreign-currency assets 48,187 14,723 8,825 12,310 84,045 93,341 –10.0 

Liabilities to banks 18,746 4,785 9,076 6,027 38,634 46,927 –17.7 

Liabilities to customers 12,345 822 2,333 4,584 20,084 21,079 –4.7 

Securitized liabilities 

Liabilities from 

7,419 88 925 3,937 12,369 20,086 –38.4 

dealing activities 2,182 300 4 512 2,998 3,224 –7.0 

Other balance-sheet items 2,932 293 1,142 920 5,287 8,793 –39.9 

Foreign-currency liabilities 43,624 6,288 13,480 15,980 79,372 100,109 –20.7 

Due to exchange-rate movements in the 2003 financial year, the consolidated balance-sheet total contracted by roughly 

712bn (previous year: –715bn). Total lending declined by 77bn (previous year: –77bn).

Notes to financial instruments 

(72) Derivative transactions 

The following tables present the respective nominal 

amounts and fair values of OTC derivatives and derivatives 

traded on a stock exchange. 

In order to minimize (reduce) both the economic and 

the regulatory credit risk arising from these instruments, 

our Legal Services department concludes master agreements 

(bilateral netting agreements) with our business 

associates (such as 1992 ISDA Master Agreement Multicurrency 

Cross-Border; German Master Agreement for 

Financial Futures). By means of such bilateral netting 

agreements, the positive and negative fair values of the 

derivatives contracts included under a master agreement 

can be offset against one another and the future regulatory 

risk add-ons for these products can be reduced. 

Through this netting process, the credit risk is limited to 

a single net claim on the party to the contract (close-out 

netting). 

For both regulatory reports and the internal measurement 

and monitoring of our credit commitments, we use 

such risk-reducing techniques only if we consider them 

enforceable under the respective legal system, should the 

business associate become insolvent. In order to check 

enforceability, we avail ourselves of legal opinions from 

various international law firms. 

Breakdown, by reference assets 

NOTES 145 

Similar to the master agreements are the collateral 

agreements (e.g. collateralization annex for financial 

futures contracts, Credit Support Annex), which we conclude 

with our business associates to secure the net claim 

or liability remaining after netting (receiving or furnishing 

of security). As a rule, this collateral management reduces 

credit risk by means of prompt (mostly daily or weekly) 

measurement and adjustment of the exposure to customers. 

On average, we achieve a credit-risk mitigation of 82% 

of the exposure for the derivatives contracts and security 

which are covered by the process of risk-reducing techniques. 

In the credit derivatives area, we registered a 23.3% 

higher volume than a year earlier. We employ these products, 

which serve to transfer credit risk, both in trading for 

arbitrage purposes and in investing for diversifying our 

loan portfolios. The following table illustrates our risk 

structure in terms of the various risk assets that have been 

hedged. 

31.12.2003 31.12.2002 

Nominal amounts Nominal amounts 

Protection Protection Protection Protection 

7 m bought sold bought sold 

OECD central governments 1,925 2,111 1,932 2,109 

OECD banks 4,261 3,428 3,918 2,867 

OECD financial institutions 5,006 5,134 4,682 5,143 

Other companies, private individuals 39,803 40,546 32,545 29,518 

Non-OECD banks 261 151 321 162 

Total 51,256 51,370 43,398 39,799

146 NOTES 

31.12.2003 Nominal amount Fair value 

Remaining lifetimes 

under 1-5 more Total positive negative 

1 year years than 

7 m 5 years 

Foreign-currency-based forward transactions 

OTC products 325,473 106,449 55,896 487,818 11,228 12,598 

Spot and forward currency transactions 205,883 13,857 634 220,374 5,237 6,484 

Interest-rate and currency swaps 57,304 81,434 52,882 191,620 4,962 5,059 

Currency call options 32,840 5,917 1,159 39,916 1,029 – 

Currency put options 29,446 5,241 1,221 35,908 – 1,055 

Other foreign-exchange contracts – – – – – – 

Products traded on a stock exchange 816 226 – 1,042 – – 

Currency futures 815 226 – 1,041 – – 

Currency options 1 – – 1 – – 

Total 326,289 106,675 55,896 488,860 11,228 12,598 

Interest-based futures transactions 

OTC products 1,017,271 1,000,787 791,759 2,809,817 46,456 47,539 

Forward-rate agreements 209,036 3,322 – 212,358 100 81 

Interest-rate swaps 767,819 843,414 685,480 2,296,713 43,013 44,248 

Call options on interest-rate futures 21,652 49,010 44,901 115,563 2,399 – 

Put options on interest-rate futures 14,169 56,107 49,255 119,531 – 2,682 

Other interest-rate contracts 4,595 48,934 12,123 65,652 944 528 

Products traded on a stock exchange 168,501 6,026 8,580 183,107 – – 

Interest-rate futures 66,157 3,347 3,892 73,396 – – 

Interest-rate options 102,344 2,679 4,688 109,711 – – 

Total 1,185,772 1,006,813 800,339 2,992,924 46,456 47,539 

Other forward transactions 

OTC products 27,110 115,056 11,644 153,810 4,328 4,420 

Structured equity/index products 1,480 4,850 1,110 7,440 837 738 

Equity call options 6,805 9,617 675 17,097 1,480 – 

Equity put options 7,212 10,576 753 18,541 – 1,688 

Credit derivatives 6,986 86,837 8,803 102,626 1,474 1,484 

Precious metal contracts 4,627 3,176 303 8,106 537 510 

Other transactions – – – – – – 

Products traded on a stock exchange 25,327 5,115 86 30,528 – – 

Equity futures 4,492 10 – 4,502 – – 

Equity options 20,835 5,105 86 26,026 – – 

Other futures – – – – – – 

Other options – – – – – – 

Total 52,437 120,171 11,730 184,338 4,328 4,420 

Total immatured forward transactions 

OTC products 1,369,854 1,222,292 859,299 3,451,445 62,012 64,557 


Total 1,564,498 1,233,659 867,965 3,666,122 62,012 64,557

As of December 31, 2002, the figures were as follows: 

31.12.2002 Nominal amount Fair value 

NOTES 147 

Remaining lifetimes 

under 1-5 more Total positive negative 

1 year years than 

7 m 5 years 

Foreign-currency-based forward transactions 

OTC products 399,133 96,456 38,591 534,180 10,633 12,296 

Spot and forward currency transactions 284,190 19,522 1,366 305,078 6,563 8,141 

Interest-rate and currency swaps 49,270 70,830 36,787 156,887 3,489 3,417 

Currency call options 33,577 3,417 219 37,213 581 – 

Currency put options 32,096 2,687 219 35,002 – 738 

Other foreign-exchange contracts – – – – – – 

Products traded on a stock exchange 291 72 – 363 – – 

Currency futures 289 72 – 361 – – 

Currency options 2 – – 2 – – 

Total 399,424 96,528 38,591 534,543 10,633 12,296 

Interest-based futures transactions 

OTC products 1,334,628 939,749 762,201 3,036,578 61,276 63,158 

Forward-rate agreements 341,578 2,306 – 343,884 361 454 

Interest-rate swaps 951,349 773,229 632,982 2,357,560 56,863 57,680 

Call options on interest-rate futures 13,796 56,978 54,341 125,115 3,372 – 

Put options on interest-rate futures 14,944 66,682 62,237 143,863 – 3,641 

Other interest-rate contracts 12,961 40,554 12,641 66,156 680 1,383 


Interest-rate futures 68,916 8,463 2,521 79,900 – – 

Interest-rate options 84,446 7,546 3,543 95,535 – – 

Total 1,487,990 955,758 768,265 3,212,013 61,276 63,158 

Other forward transactions 

OTC products 27,411 53,409 58,440 139,260 7,339 5,349 

Structured equity/index products 2,405 4,409 470 7,284 2,472 418 

Equity call options 7,892 12,166 197 20,255 3,648 – 

Equity put options 7,037 11,932 260 19,229 – 3,735 

Credit derivatives 782 24,902 57,513 83,197 1,185 1,137 

Precious metal contracts 9,295 – – 9,295 34 59 

Other transactions – – – – – – 

Products traded on a stock exchange 23,036 4,204 – 27,240 – – 

Equity futures 4,666 2 – 4,668 – – 

Equity options 18,370 4,202 – 22,572 – – 

Other futures – – – – – – 

Other options – – – – – – 

Total 50,447 57,613 58,440 166,500 7,339 5,349 

Total immatured forward transactions 

OTC products 1,761,172 1,089,614 859,232 3,710,018 79,248 80,803 


Total 1,937,861 1,109,899 865,296 3,913,056 79,248 80,803

148 NOTES 

Breakdown of derivatives business, by borrower group: 

31.12.2003 31.12.2002 

Fair value Fair value 

7 m positive negative positive negative 

OECD central governments 1,109 368 308 150 

OECD banks 49,439 50,361 73,407 74,363 

OECD financial institutions 8,256 8,978 2,197 2,560 

Other companies, private individuals 2,609 4,391 2,790 3,135 

Non-OECD banks 599 459 546 595 

Total 62,012 64,557 79,248 80,803 

Fair values appear as the sum totals of the positive and negative amounts per contract, from which no pledged security 

has been deducted and no possible netting agreements have been taken into consideration. By definition, no positive 

fair values exist for put options. 

(73) Market risk arising from trading activities 

For the daily quantification and monitoring of market risk, 

especially that arising in proprietary trading, mathematical-statistical 

methods are used to calculate the value-atrisk. 

The underlying statistical parameters are based on 

an observation period of the past 255 trading days, a 10day 

holding period and a confidence level of 99%. The 

value-at-risk models are constantly being adapted to the 

changing environment. 

Risk position of the trading portfolio (Principle I risks): 

On the basis of the risk ratios, the Group manages 

the market risk for all operative units by a system of risk 

limits, primarily by means of limits for the potential risk 

(value-at-risk) and stress scenarios, as well as loss-review 

triggers. 

The risk position of the Group’s trading portfolio at 

year-end shows the value-at-risk, broken down by the 

various business lines engaged in proprietary trading. 

The value-at-risk shows the potential losses which will not 

be exceeded with a 99% degree of probability. 

Portfolio Holding period 31.12.2003 31.12.2002 

7 m Confidence level 99% 

Group 10 days 66.8* ) 49.3* ) 

Securities department 10 days 57.7 50.8 

Treasury department 10 days 16.8 29.1 

* ) The relatively low value-at-risk at Group level is the result of strong portfolio effects between the Securities and Treasury departments.

(74) Interest-rate risk 

The interest-rate risk of the Commerzbank Group results 

from the items in both the trading book and the banking 

book. In the latter, interest-rate risk mainly arises through 

maturity mismatches between the Bank’s interest-bearing 

assets and liabilities – for instance, through the short-term 

NOTES 149 

funding of long-dated loans. The interest-rate items 

shown in the balance sheet and also the derivatives 

employed to steer them are drawn upon in the measurement 

of interest-rate risk. 

The interest-rate risk of the banking book is measured on the basis of a net present value approach, applying the historical 

simulation method: 

31.12.2003 Holding period Banking book Trading book Overall 

Portfolio interest-rate risk 

7 m Confidence level: 99% 

Group 10 days 195.72 61.96 213.77 

31.12.2002 Holding period Banking book Trading book Overall 

Portfolio interest-rate risk 

7 m Confidence level: 99% 

Group 10 days 103.44 46.01 142.04 

The value-at-risk figures show the potential losses in 7 m, which at the given holding period of 10 days will not be 

exceeded with a probability of 99%.

150 NOTES 

(75) Concentration of credit risk 

Concentrations of credit risks may arise through business 

relations with individual borrowers or groups of borrowers 

who share a number of features and whose individual 

ability to service debt is influenced to the same extent by 

changes in certain overall economic conditions. These 

risks are managed by the Credit Risk Management department. 

Credit risk throughout the Group is monitored by 

the use of limits for each individual borrower and borrower 

unit, through the furnishing of the appropriate 

security and through the application of a uniform lending 

policy. In order to minimize credit risk, the Bank has 

entered into a number of master netting agreements ensuring 

the right to set off the claims on and liabilities to a 

client in the case of default by the latter or insolvency. In 

addition, the management regularly monitors individual 

portfolios. The Group’s lending does not reveal any special 

dependence on individual sectors. 

In terms of book values, the credit risks relating to balance-sheet financial instruments were as follows on December 

31, 2003: 

Claims 

7 m 31.12.2003 31.12.2002 

Customers in Germany 96,364 95,843 

Companies and self-employed 44,037 46,269 

Manufacturing 10,808 12,612 

Construction 824 871 

Distributive trades 5,370 5,824 

Services, incl. professions and others 27,035 26,962 

Public sector 16,141 15,658 

Other retail customers 36,186 33,916 

Customers abroad 42,074 52,671 

Corporate and retail customers 38,618 49,155 

Public sector 3,456 3,516 

Sub-total 138,438 148,514 

less valuation allowances –5,471 –5,293 

Total 132,967 143,221

(76) Assets pledged as security 

NOTES 151 

Assets in the amounts shown below were pledged as security for the following liabilities and liabilities from dealing 

activities: 

31.12.2003 31.12.2002 Change 

7 m 7 m in % 

Liabilities to banks 35,293 45,993 –23.3 

Liabilities to customers 10,261 10,436 –1.7 

Liabilities from dealing activities 1,983 0 • 

Total 47,537 56,429 –15.8 

The following assets were pledged as security for the above-mentioned liabilities: 

31.12.2003 31.12.2002 Change 

7 m 7 m in % 

Claims on banks 1,916 582 • 


Assets held for dealing purposes and 

11,208 11,346 –1.2 

investments and securities portfolio 42,613 45,904 –7.2 

Total 55,737 57,832 –3.6 

The furnishing of security in order to borrow funds took the form of genuine securities repurchase agreements (repos). 

At the same time, security was furnished for funds borrowed for fixed specific purposes and securities-lending transactions.

152 NOTES 

(77) Maturities, by remaining lifetime 

Remaining lifetimes as of 31.12.2003 

due on demand and up to 3 months 1 year more than 

7 m unlimited in time 3 months to 1 year to 5 years 5 years 

Claims on banks 16,973 20,946 6,956 3,298 3,484 


Bonds and notes from the 

18,015 24,731 15,402 31,631 48,659 

assets held for dealing purposes 

Bonds, notes and other fixed-income 

securities and also claims not 

originated by the Bank held in 

255 1,896 3,336 8,132 5,480 

investments and securities portfolio 306 3,767 5,342 28,523 41,291 

Total 35,549 51,340 31,036 71,584 98,914 

Liabilities to banks 17,441 47,845 13,031 5,414 11,518 

Liabilities to customers 34,294 52,740 3,240 3,040 6,686 

Securitized liabilities 78 18,025 13,194 34,555 18,140 

Subordinated capital – 291 478 2,702 4,910 

Total 51,813 118,901 29,943 45,711 41,254 

Remaining lifetimes as of 31.12.2002 

due on demand and up to 3 months 1 year more than 

7 m unlimited in time 3 months to 1 year to 5 years 5 years 

Claims on banks 13,796 26,136 5,670 4,433 4,308 


Bonds and notes from the 

17,110 34,124 14,243 32,638 50,399 

assets held for dealing purposes 

Bonds, notes and other fixed-income 

securities and also claims not 

originated by the Bank held in 

5 2,408 7,128 15,094 10,513 

investments and securities portfolio 388 3,411 7,802 30,027 33,151 

Total 31,299 66,079 34,843 82,192 98,371 

Liabilities to banks 13,108 76,792 10,703 4,846 9,535 

Liabilities to customers 33,108 47,888 4,549 3,545 6,610 

Securitized liabilities 23 20,996 18,094 34,683 18,936 

Subordinated capital – 133 901 2,593 5,610 

Total 46,239 145,809 34,247 45,667 40,691 

The remaining lifetime is defined as the period between the balance-sheet date and the contractual maturity of the claim 

or liability. In the case of claims or liabilities which are paid in partial amounts, the remaining lifetime has been recognized 

for each partial amount.

(78) Fair value of financial instruments 

The table below compares the fair values of the balancesheet 

items with their book values. Fair value is the 

amount at which financial instruments may be sold or purchased 

at fair terms on the balance-sheet date. Insofar as 

market prices (e.g. for securities) were available, we have 

used these for measurement purposes. For a large number 

of financial instruments, internal measuring models 

NOTES 153 

Fair value Book value Difference 

7 bn 31.12.2003 31.12.2002 31.12.2003 31.12.2002 31.12.2003 31.12.2002 

Assets 

involving current market parameters were used in the 

absence of market prices. In particular, the net presentvalue 

method and option-price models were applied. 

Wherever claims on and liabilities to banks and customers 

had a remaining lifetime of less than a year, the fair value 

was considered for simplicity’s sake to be that shown in 

the balance sheet. 

Cash reserve 7.4 8.5 7.4 8.5 – – 

Claims on banks 51.7 54.3 51.7 54.3 – – 

Claims on customers 140.4 150.6 138.4 148.5 2.0 2.1 

Hedging instruments 

Assets held for 

2.6 3.1 2.6 3.1 – – 

dealing purposes 

Investments and 

87.6 117.2 87.6 117.2 – – 

securities portfolio 

Liabilities 

87.9 84.6 87.9 84.6 – – 

Liabilities to banks 95.2 115.1 95.2 115.0 – 0.1 

Liabilities to customers 100.1 95.9 100.0 95.7 0.1 0.2 

Securitized liabilities 84.4 93.0 84.0 92.7 0.4 0.3 

Hedging instruments 

Liabilities from 

5.9 5.7 5.9 5.7 – – 

dealing activities 67.0 83.2 67.0 83.2 – – 

Subordinated capital 8.3 9.2 8.4 9.2 –0.1 – 

In net terms, the difference between the book value and 

fair value, which can be seen as a hidden reserve, 

amounted for all items to 71.6bn (previous year: 71.5bn) 

as of December 31, 2003. For covering these items, cash 

flow hedges are used for the most part. As of December 

31, 2003, the measurement of cash flow hedges yielded a 

figure of –71.2bn (previous year: –71.2bn). As of both 

December 31, 2003 and December 31, 2002, the hidden 

reserves in interest-bearing assets and liabilities exceeded 

the negative valuation of the cash flow hedges.

154 NOTES 

Other notes 

(79) Subordinated assets 

The following subordinated assets are included in the assets shown in the balance sheet: 

31.12.2003 31.12.2002 Change 

7 m 7 m in % 


Bonds and notes 81 53 52.8 

Other variable-yield securities 345 388 –11.1 

Total 514 530 –3.0 

including: banks in which an equity investment exists 319 358 –10.9 

Assets are considered to be subordinated if the claims they represent may not be met before those of other creditors in 

the case of the liquidation or insolvency of the issuer. 

(80) Off-balance-sheet commitments 

31.12.2003 31.12.2002 Change 

7 m 7 m in % 

Contingent liabilities 26,404 29,057 –9.1 

from rediscounted bills of exchange credited to borrowers 3 4 –25.0 

from guarantees and indemnity agreements 26,401 29,053 –9.1 

Credit guarantees 3,640 3,144 15.8 

Other guarantees 14,390 15,206 –5.4 

Letters of credit 5,964 8,052 –25.9 

Other items 2,407 2,651 –9.2 

Irrevocable lending commitments 39,136 45,979 –14.9 

Book credits to banks 1,929 2,523 –23.5 

Book credits to customers 35,031 41,420 –15.4 

Credits by way of guarantee 1,162 673 72.7 

Letters of credit 1,014 1,363 –25.6 

Other commitments 28 27 3.7 

Provision for risks arising from off-balance-sheet commitments has been deducted from the respective items.

(81) Volume of managed funds 

By type of managed fund, the assets which we manage break down as follows: 

NOTES 155 

31.12.2003 31.12.2002 

Number Fund assets Number Fund assets 

of funds 7 bn of funds 7 bn 

Retail investment funds 436 50.0 361 42.3 

Equity-based and mixed funds 286 23.7 243 19.5 

Bond-based funds 125 12.2 97 10.8 

Money-market funds 25 14.1 21 12.0 

Non-publicly-offered funds 1,309 28.2 1,356 29.1 

Property-based funds 3 12.0 3 10.6 

Total 1,748 90.2 1,720 82.0 

The regional breakdown of the funds launched is shown in the following chart: 

31.12.2003 31.12.2002 

Number Fund assets Number Fund assets 

of funds 7 bn of funds 7 bn 

Germany 421 45.7 499 46.5 

United Kingdom 994 14.3 989 12.6 

Other European countries 281 27.2 172 19.0 

America 10 1.4 20 2.1 

Other countries 42 1.6 40 1.8 

Total 1,748 90.2 1,720 82.0

156 NOTES 

(82) Genuine repurchase agreements 

Under its genuine repurchase agreements, the Commerzbank 

Group sells or purchases securities with the obligation 

to repurchase or return them. The money equivalent 

deriving from repurchase agreements in which the 

Commerzbank Group is a borrower (commitment to take 

the securities back) is shown in the balance sheet as a liability 

to banks or customers. 

The genuine repurchase agreements concluded up to the balance-sheet date break down as follows: 

31.12.2003 31.12.2002 Change 

7 m 7 m in % 

Genuine repurchase agreements as a borrower 

(repo agreements) 

Liabilities to banks 19,111 27,913 –31.5 

Liabilities to customers 13,252 9,746 36.0 

Total 

Genuine repurchase agreements as a lender 

(reverse repo agreements) 

32,363 37,659 –14.1 

Claims on banks 20,880 21,076 –0.9 

Claims on customers 7,746 8,992 –13.9 

Total 28,626 30,068 –4.8 

(83) Securities-lending transactions 

Securities-lending transactions are conducted with other 

banks and customers in order to cover our need to meet 

delivery commitments or to enable us to effect securities 

repurchase agreements in the money market. We show 

lent securities in our balance sheet under our trading portfolio 

or under the investments and securities portfolio, 

whereas borrowed securities do not appear in the balance 

sheet. The expenses and income from securities-lending 

transactions, insofar as they relate to the past financial 

year, appear under interest paid or received in the income 

statement and reflect the respective maturities. 

31.12.2003 31.12.2002 Change 

7 m 7 m in % 

Lent securities 8,821 9,546 –7.6 

Borrowed securities 8,576 11,953 –28.3

(84) Trust transactions at third-party risk 

NOTES 157 

Trust transactions which do not have to be shown in the balance sheet amounted to the following on the balance-sheet 

date: 

31.12.2003 31.12.2002 Change 

7 m 7 m in % 

Claims on banks 4 27 –85.2 


Other assets 581 466 24.7 

Assets on a trust basis at third-party risk 658 661 –0.5 

Liabilities to banks 52 56 –7.1 

Liabilities to customers 606 605 0.2 

Liabilities on a trust basis at third-party risk 658 661 –0.5 

(85) Risk-weighted assets and capital ratios as defined by the Basel capital accord (BIS) 

Like other internationally active banks, the Commerzbank 

Group has committed itself to meeting the demands on 

capital adequacy contained in the Basel accord. This imposes 

on banks a minimum requirement of 8% of own 

funds to risk-weighted assets (own funds ratio). A minimum 

requirement of 4% applies universally for the ratio 

between core capital and risk-weighted assets (core capital 

ratio). 

Own funds are defined as liable capital that is made up 

of core and supplementary capital, plus Tier III capital. 

Core capital mainly consists of subscribed capital plus 

reserves and minority interests, less goodwill. Supplementary 

capital comprises outstanding profit-sharing 

certificates and subordinated long-term liabilities. Tier III 

capital consists of short-term subordinated liabilities. 

The structure of the Commerzbank Group’s capital in accordance with the Basel capital accord yields the following 

picture: 

31.12.2003 31.12.2002 Change 

7 m 7 m in % 

Core capital 10,257 11,691 –12.3 

of which: hybrid capital – – – 

Supplementary capital 7,868 7,762 1.4 

Liable capital 18,125 19,453 –6.8 

Tier III capital 125 209 –40.2 

Eligible own funds 18,250 19,662 –7.2

158 NOTES 

as of 31.12.2003 Capital charges in % Total 

7 m 100 50 25 20 10 4 

Balance-sheet business 

Traditional off-balance-sheet 

91,455 5,709 – 11,020 – – 108,184 

business 

Derivatives business in 

4,748 14,946 11 571 344 47 20,667 

investment portfolio – 2,578 – 4,400 – – 6,978 

Risk-weighted assets, total 96,203 23,233 11 15,991 344 47 135,829 

Risk-weighted market risk position 

multiplied by 12.5 5,000 

Total items to be risk-weighted 140,829 

Eligible own funds 18,250 

Core capital ratio (excluding market-risk position) 7.6 

Core capital ratio (including market-risk position) 7.3 

Own funds ratio (including market-risk position) 13.0 

as of 31.12.2002 Capital charges in % Total 

7 m 100 50 25 20 10 4 

Balance-sheet business 

Traditional off-balance-sheet 

105,733 6,265 – 10,562 – – 122,560 

business 

Derivatives business in 

5,369 17,061 14 781 325 50 23,600 

investment portfolio – 3,699 – 6,681 – – 10,380 

Risk-weighted assets, total 111,102 27,025 14 18,024 325 50 156,540 

Risk-weighted market risk position 

multiplied by 12.5 3,650 

Total items to be risk-weighted 160,190 

Eligible own funds 19,662 

Core capital ratio (excluding market-risk position) 7.5 

Core capital ratio (including market-risk position) 7.3 

Own funds ratio (including market-risk position) 12.3

Reconciliation of reported capital with eligible equity in accordance with BIS 

NOTES 159 

31.12.2003 Core capital/ Minority Supplementary/ Tier III Total 

7 m equity interests subordinated capital capital 

Reported in balance sheet 

Reclassifications 

9,091 1,213 8,381 – 18,685 

Minority interests1) 932 –1,023 –91 

Tier III capital 

Deduction of goodwill, 

if relevant for Basel 

–125 125 0 

consolidation 

Changes in consolidated 

–187 –187 

companies 

Parts of subordinated capital 

not eligible due to limited 

374 374 

remaining lifetime 

Revaluation reserve 

and measurement of 

–1,010 –1,010 

cash flow hedges 

Latent revaluation 

–4 –190 –194 

reserves for securities 

General provisions/ 

477 477 

reserves for defaults 300 300 

Other differences 51 –155 –104 

Eligible equity 10,257 0 7,868 125 18,250 

1) excluding net profit 

(86) Liquidity ratio of Commerzbank AG (Principle II) 

Pursuant to Art. 11, KWG, banks are obliged to invest their 

funds such that adequate liquidity for payment purposes 

is guaranteed at all times. They have to demonstrate that 

they have adequate liquidity in the form of a liquidity 

analysis (Principle II). The liquidity-weighted assets 

(claims, securities, etc.), structured to reflect their respective 

maturity brackets, are set off against certain liquidityweighted 

balance-sheet and off-balance-sheet liabilities 

(liabilities, lending commitments), broken down by 

remaining lifetime. The ratio between the funds in the first 

maturity bracket (remaining life of up to one month) and 

the payment obligations which may fall due during this 

period has to reach a value of one every day. If the ratio 

registers the value of one, liquidity is considered to be 

adequate. As of December 31, 2003, the liquidity ratio 

worked out by Commerzbank AG was 1.12 (previous year: 

1.13). Excess liquidity stood at 714.6bn (previous year: 

714.8bn).

160 NOTES 

(87) Securitization of credits 

The use of credit derivatives (such as credit default swaps, 

total return swaps, and credit-linked notes) can reduce the 

imputed risk of a loan portfolio, whereby the hedging 

effect of a credit derivative may relate both to individual 

credits or securities and to entire portfolios of loans or 

securities. As a rule, security is furnished by means of 

a synthetic securitization (credit default swap) or in the 

form of cash security. But forms of traditional cover (e.g. 

the disposal of claims) are also possible. The hedging programmes 

launched by the Commerzbank Group are 

intended to ease the strain on regulatory capital. 

By the end of the 2003 financial year, Commerzbank 

AG and two of its subsidiaries had launched ten securitization 

programmes as the buyers of protection. 

The time band stretches from 4 to 32 years. All told, credits to customers of 713.3bn had been hedged by end-December 

2003. This eased the burden on the Bank’s risk-weighted assets by 79.4bn. 

Name of Year of Duration of Type of claim Size of Reduction Buyer of protection 

transaction conclusion transaction credit of riskin 

years weighted 

assets 

7 m 7 m 

Kaiserplatz 263 1999 6 1) Corporate loans 1,500 1,182 Commerzbank AG 

Residence 2000-1 2000 32 Private home loans 707 455 Commerzbank AG 

(CLN) 

Residence 2000-1 2000 32 Private home loans 983 436 Commerzbank AG 

(CDS) 

Residence 2001-1 2001 30 Private home loans 1,262 517 Commerzbank AG 

Paneuropean CLO 2001 6 Corporate loans 3,243 2,432 Commerzbank AG 

Paneuropean CLO 2001 6 Corporate loans 37 30 Commerzbank 

(Nederland) N.V. 

Paneuropean CLO 2001 6 Corporate loans 55 44 Commerzbank 

International S.A., 

Luxembourg2) Promise C 2002-1 2002 8 Corporate loans 1,470 1,243 Commerzbank AG 

Residence 2002-1 2002 31 Private home loans 1,310 1,310 Commerzbank AG 



1) extended by two years 

13,288 9,364 

2) after Commerzbank International (Europe), Dublin, was merged with Commerzbank International S.A. Luxembourg

(88) Average number of staff employed by the Bank during the year 

2003 2002 

NOTES 161 

total male female total male female 

Group 32,898 17,515 15,383 36,450 19,082 17,368 

in Germany 25,559 12,747 12,812 28,785 14,375 14,410 

abroad 7,339 4,768 2,571 7,665 4,707 2,958 

The above figures include both full-time and part-time personnel. Not included in the figures are the average number of 

employees undergoing training within the Group. The average time worked by part-time staff is 55% (previous year: 

58%) of the standard working time. 

total male female 

2003 2002 2003 2002 2003 2002 

Trainees 1,437 1,526 559 576 878 950 

(89) Remuneration and loans to board members 

The following remuneration was paid to members of the Board of Managing Directors and the Supervisory Board: 

2003 2002 

71,000 71,000 

Board of Managing Directors 7,014 11,097 

Supervisory Boards 520 613 

Retired managing directors and their dependents 7,022 7,567 

The Board of Managing Directors’ overall remuneration 

amounted to 7,014 thousand euros, which includes the 

Chairman’s remuneration of 1,420 thousand euros. The 

remuneration of the Board of Managing Directors is made 

up of the following components 

1. Fixed remuneration 

The fixed remuneration of the members of the Board of 

Managing Directors amounted to 7360,000 each in the 

2003 financial year; the chairman received an additional 

premium. The fixed remuneration remained unchanged 

on the previous year. 

2. Variable remuneration (bonus) 

The variable remuneration received by a member of the 

Board of Managing Directors is based on the Group’s business 

success and the attainment of individual targets. As 

variable remuneration is dependent upon the presentation 

of established and audited consolidated financial 

statements as the basis for assessing the Group’s business 

success, it is paid in the current year for performance 

in the past year and is included in the published remuneration 

of the Board in the current year. The aggregate 

amount of variable remuneration paid in 2003 for the 2002 

financial year to active members of the Board of Managing 

Directors of Commerzbank AG as the parent company 

of the Group was 73.0m as against 74.9m a year earlier. 

This represents a decline of 38.8%. 

3. Remuneration of the boards of subsidiaries 

The above table also includes the remuneration paid to 

members of the Board of Managing Directors in selected 

cases for taking on board functions at subsidiaries. 

4. Share-based remuneration 

Active members of the Board of Managing Directors have 

participated in the Long-Term Performance plans of 1999 

to 2003, described in note 28, by investing in altogether

162 NOTES 

36,200 Commerzbank shares at the currently valid daily 

price. No payments were made under these plans in the 

2003 financial year. A provision of 76.3m has been formed 

to cover expected payments in the future under LTP 2003; 

of this amount, 70.3m relates to active members of the 

Board of Managing Directors. 

5. Remuneration in kind 

Members of the Board of Managing Directors are granted 

remuneration in kind on the usual scale. In 2003, these 

benefits were equivalent to 7598,869. 

6. Shares, stock options and similar rights 

In line with the German Corporate Governance Code, 

purchases and disposals of Commerzbank shares and 

options by members of the Board of Managing Directors 

have to be reported if they exceed the amount of 725,000 

within 30 days. The Bank publishes these on its internet 

site. On November 13, 2003, 2,000 shares were bought by 

a member of the Board of Managing Directors to the value 

of 30 thousand euros. 

7. Pension commitments 

For active and former members of the Board of Managing 

Directors and their surviving dependents, the Bank has 

established a provision for old age, which, as planned and 

explained in detail last year, was partially invested with 

Commerzbank Pension Trust e.V. in this financial year. 

As a result, the subsequently remaining provisions for 

pension commitments as of end-2003 amounted to 73.6m 

for active members and 78.4m for former members of 

the Board of Managing Directors and their surviving dependents. 

The pension commitments (defined-benefit 

obligations) pursuant to IAS for members of the Board of 

Managing Directors or their dependents amounted to 

772.3m on December 31, 2003. 

In the course of adapting the articles of association of 

Commerzbank AG to the rules of the German Corporate 

Governance Code, the remuneration of the Supervisory 

Board was also altered with effect from July 1, 2003, as 

resolved by the AGM on May 30, 2003. In accordance with 

both the former and the new provision contained in the 

articles of association, no variable remuneration could be 

paid to the Supervisory Board in the 2003 financial year. For 

their activity on the Supervisory Board in the past financial 

year, the Bank paid members the following fixed remuneration, 

which was calculated on the basis of different provisions 

in either the first or the second half of the year. 

● The Chairman of the Supervisory Board, who belonged 

to the Supervisory Board throughout the entire 

2003 financial year, received 733,050.71 and additionally 

for chairing both the Presiding and the Risk Committees 

altogether 720,000. 

● Nine members who belonged to the Supervisory 

Board throughout the entire financial year received 

711,525.35 each. In addition, one member received 

715,000 for chairing the Audit Committee and being a 

member of the Risk Committee. Four other members 

of the Supervisory Board received an additional 

75,000 each as they were members of a Supervisory 

Board committee. 

● Nine members of the Supervisory Board whose term 

of office began after the Annual General Meeting on 

May 30, 2003, received 710,255.65 each, and four of 

them an extra 75,000 each as they were members of 

aSupervisory Board committee. The newly elected 

Deputy Chairman of the Supervisory Board received 

720,383.47 and an additional 75,000 for being a member 

of a Supervisory Board committee. 

All told, 7262,795.10 was paid to the Chairman, Deputy 

Chairman and members of the Supervisory Board and 

780,000 for the chairman and members of the Presiding, 

Audit and Risk Committees. At the same time, the members 

of the Supervisory Board had their expenses reimbursed 

as well as the turnover tax levied on their remuneration. 

Altogether 799,000 was paid by way of meeting 

attendance fees for participation in the meetings of the 

Supervisory Board and the three above-mentioned committees 

during the second half of 2003, i.e. 71,500 per 

meeting attended. The members of the Supervisory 

Board and its committees may be found on p. 177f. of this 

annual report. 

No purchases or disposals by members of the Supervisory 

Board of Commerzbank shares and options exceeding 

725,000 overall within 30 days were reported in 

the 2003 financial year. 

All told, the Board of Managing Directors and Supervisory 

Board held no more than 1% of the issued shares 

and option rights of Commerzbank AG on December 31, 

2003.

NOTES 163 

On the balance-sheet date, the aggregate amount of advances and loans granted, as well as contingent liabilities, was 

as follows: 

31.12.2003 31.12.2002 

71,000 71,000 

Board of Managing Directors 3,382 5,231 

Supervisory Boards 1,631 1,318 

Interest at normal market rates is paid on all the loans to members of the Board of Managing Directors and the Supervisory 

Boards. 

(90) Other commitments 

Commitments towards companies both outside the Group 

and not included in the consolidation for uncalled payments 

on shares in private limited-liability companies 

issued but not fully paid amount to 77m (previous year: 

717m). 

The Bank is responsible for the payment of assessments 

of up to 738m to Liquiditäts-Konsortialbank (Liko) 

GmbH, Frankfurt am Main, the ”lifeboat” institution of the 

German banking industry. The individual banking associations 

have also declared themselves responsible for the 

payment of assessments to Liko. To cover such assessments, 

Group companies have pledged to Liko that they 

will meet any payment in favour of their respective associations. 

Under Art. 5, (10) of the statutes of the German banks’ 

Deposit Insurance Fund, we have undertaken to indemnify 

the Association of German Banks, Berlin, for any 

losses incurred through support provided for banks in 

which Commerzbank holds a majority interest. 

Obligations towards futures and options exchanges 

and also towards clearing centres, for which securities 

have been deposited as collateral, amount to 7960m (previous 

year: 71,957m). 

Our subsidiaries Caisse Centrale de Réescompte S.A., 

Paris, and ADIG-Investment Luxemburg S.A., Luxembourg, 

have provided performance guarantees for 

selected funds. 

The Group’s existing obligations arising from rental 

and leasing agreements – buildings, office furniture and 

equipment – will lead to expenses of 7239m in 2004, 

7176m per year in the years 2005-2007, and 7124m as 

from the year 2008.

164 NOTES 

(91) Letter of comfort 

In respect of the subsidiaries listed below and included in the consolidated financial statements of our Bank, we ensure 

that, except in the case of political risks, they are able to meet their contractual liabilities. 

Name Seat 

ADIG-Investment Luxemburg S.A. Luxembourg 

ATBRECOM Limited London 

BRE Bank SA Warsaw 

BRE Leasing Sp. z o.o. Warsaw 

Caisse Centrale de Réescompte, S.A. Paris 

CBG Commerz Beteiligungsgesellschaft mbH Frankfurt am Main 

CCR Actions Paris 

CCR Chevrillon-Philippe Paris 

CCR Gestion Paris 

CCR Gestion Internationale Paris 

CICM Fund Management Limited Dublin 

comdirect bank Aktiengesellschaft (sub-group) Quickborn 

COMINVEST Asset Management GmbH Frankfurt am Main 

Commerz (East Asia) Ltd. Hong Kong 

Commerz Advisory Management Co. Ltd. British Virgin Islands 

Commerz Asset Management (UK) plc London 

Commerz Asset Management Asia Pacific Pte Ltd. Singapore 

Commerz Asset Management Holding GmbH Frankfurt am Main 

Commerz Equity Investments Ltd. London 

Commerz Europe (Ireland), Inc. Wilmington/Delaware 

Commerz Futures, LLC. Wilmington/Delaware 

Commerz International Capital Management (Japan) Ltd. Tokyo 

Commerz Securities (Japan) Company Ltd. Hong Kong/Tokyo 

Commerzbank (Budapest) Rt. Budapest 

Commerzbank (Eurasija) SAO Moscow 

Commerzbank (Nederland) N.V. Amsterdam 

Commerzbank (South East Asia) Ltd. Singapore 

Commerzbank (Switzerland) Ltd Zurich 

Commerzbank Asset Management Asia Ltd. Singapore 

Commerzbank Auslandsbanken Holding AG Frankfurt am Main 

Commerzbank Belgium S.A. N.V. Brussels 

Commerzbank Capital Markets Corporation New York 

Commerzbank Europe (Ireland) Unlimited Dublin 

Commerzbank Europe Finance (Ireland) plc Dublin 

Commerzbank Inlandsbanken Holding AG Frankfurt am Main 

Commerzbank International S.A. Luxembourg 

Commerzbank Overseas Finance N.V. Curaçao 

CommerzLeasing und Immobilien AG (sub-group) Düsseldorf 

Erste Europäische Pfandbrief- und Kommunalkreditbank Aktiengesellschaft in Luxemburg Luxembourg 

European Bank for Fund Services GmbH (ebase) Haar near Munich 

Gracechurch TL Ltd. London 

Hypothekenbank in Essen AG Essen

Name Seat 

Intermarket Bank AG Vienna 

Jupiter Administration Services Limited London 

Jupiter Asset Management (Asia) Limited Hong Kong 

Jupiter Asset Management (Bermuda) Limited Bermuda 

Jupiter Asset Management Limited London 

Jupiter Asset Managers (Jersey) Limited Jersey 

Jupiter International Group plc London 

Jupiter Unit Trust Managers Limited London 

OLEANDRA Grundstücks-Vermietungsgesellschaft mbH & Co., Objekt Jupiter KG Düsseldorf 

OLEANDRA Grundstücks-Vermietungsgesellschaft mbH & Co., Objekt Luna KG Düsseldorf 

OLEANDRA Grundstücks-Vermietungsgesellschaft mbH & Co., Objekt Neptun KG Düsseldorf 

OLEANDRA Grundstücks-Vermietungsgesellschaft mbH & Co., Objekt Pluto KG Düsseldorf 

OLEANDRA Grundstücks-Vermietungsgesellschaft mbH & Co., Objekt Uranus KG Düsseldorf 

OLEANDRA Grundstücks-Vermietungsgesellschaft mbH & Co., Objekt Venus KG Düsseldorf 

P.T. Bank Finconesia Jakarta 

RHEINHYP-BRE Bank Hipoteczny SA Warsaw 

Stampen S.A. Brussels 

Transfinance a.s. Prague 

Tyndall Holdings Limited London 

Tyndall International Holdings Limited Bermuda 

Tyndall Investments Limited London 

Tyndall Trust International I.O.M. Limited Isle of Man 

NOTES 165 

von der Heydt-Kersten & Söhne Wuppertal-Elberfeld 

(92) Corporate Governance Code 

We have issued our declaration of compliance with the German Corporate Governance Code pursuant to Art. 161, German 

Stock Corporation Act – AktG and made it available to shareholders on the internet (www.commerzbank.com).

166 NOTES 

Boards of Commerzbank Aktiengesellschaft 


Dr. Walter Seipp 

Honorary Chairman 

Dr. h.c. Martin Kohlhaussen 

Chairman 

Uwe Tschäge* ) 

Deputy Chairman 

Hans-Hermann Altenschmidt* ) 

Dott. Sergio Balbinot 

Herbert Bludau-Hoffmann* ) 

Astrid Evers* ) 

Uwe Foullong 

Daniel Hampel* ) 

Dr.-Ing. Otto Happel 

* ) since May 30, 2003 


Klaus-Peter Müller 

Chairman 

Martin Blessing 

Mehmet Dalman 

Dr. jur. Heiner Hasford* ) 

Sonja Kasischke* ) 

Wolfgang Kirsch* ) 

Werner Malkhoff* ) 

Klaus Müller-Gebel 

Dr. Sabine Reiner* ) 

Dr. Erhard Schipporeit 

Prof. Dr.-Ing. Ekkehard Schulz 

Prof. Dr. Jürgen F. Strube 

Dr. Klaus Sturany 

Dr.-Ing. E.h. Heinrich Weiss 

Wolfgang Hartmann 

Andreas de Maizière 

Klaus M. Patig 

The following members left the 

Supervisory Board on May 30, 2003, 

when their period of office ended: 

Hans-Georg Jurkat 


Heinz-Werner Busch 

Oswald Danzer 

Detlef Kayser 

Dieter Klinger 

Dr. Torsten Locher 

Mark Roach 

Werner Schönfeld 

Alfred Seum 

Hermann Josef Strenger 

Dr. Axel Frhr. v. Ruedorffer 

(until May 30, 2003) 

Dr. Eric Strutz (since April 1, 2004) 

Nicholas Teller (since April 1, 2003)

Holdings in affiliated and other companies 

Affiliated companies included in the consolidation 

NOTES 167 

Name Seat Share of of which: Equity 

capital held indirectly in 1,000 

in % in % 

Atlas-Vermögensverwaltungs-Gesellschaft mbH Bad Homburg v.d.H. 100.0 7 691,667 

ATBRECOM Limited London 100.0 100.0 7 11 

TOMO Vermögensverwaltungsgesellschaft mbH 

Zweite Umbra Vermögensverwaltungs- 

Frankfurt am Main 100.0 100.0 7 22,778 

gesellschaft mbH Frankfurt am Main 100.0 100.0 7 46 

BRE Bank SA Warsaw 72.2 ZI 1,583,287 

BRE Leasing Sp. z o.o. Warsaw 100.0 100.0 ZI 28,037 

Intermarket Bank AG Vienna 54.8 54.8 7 16,194 

RHEINHYP-BRE Bank Hipoteczny SA Warsaw 50.0 50.0 ZI 140,912 

Transfinance a.s. Prague 100.0 100.0 Kc˘ 195,477 

Caisse Centrale de Réescompte, S.A. Paris 99.6 7 170,315 

CCR Actions Paris 92.0 92.0 7 1,872 

CCR Chevrillon-Philippe Paris 85.0 85.0 7 2,661 

CCR Gestion Paris 96.0 96.0 7 7,037 

CCR Gestion Internationale Paris 100.0 100.0 7 2,514 

Commerz (East Asia) Ltd. Hong Kong 100.0 7 44,801 

Commerz Asset Management (UK) plc London 100.0 £ 184,091 

Jupiter International Group plc (sub-group) London 100.0 100.0 £ 180,581 

Jupiter Asset Management Limited London 100.0 100.0 

Jupiter Unit Trust Managers Limited London 100.0 100.0 

Tyndall Holdings Limited London 100.0 100.0 

Jupiter Administration Services Limited London 100.0 100.0 

Tyndall Investments Limited London 100.0 100.0 

Tyndall International Holdings Limited Bermuda 100.0 100.0 

Jupiter Asset Management (Asia) Limited 

Jupiter Asset Management 

Hong Kong 100.0 100.0 

(Bermuda) Limited Bermuda 100.0 100.0 

Jupiter Asset Management (Jersey) Limited Jersey 100.0 100.0 

Jupiter Asset Managers (Jersey) Limited Jersey 100.0 100.0 

Tyndall Trust International I.O.M. Limited Isle of Man 100.0 100.0 

Tyndall International Group Limited Bermuda 100.0 100.0 

Lanesborough Limited Bermuda 52.9 52.9 

NALF Holdings Limited Bermuda 100.0 100.0 

The New Asian Property Fund Limited Bermuda 66.8 66.8 

Commerz Asset Management Holding GmbH Frankfurt am Main 100.0 7 505,574 

ADIG-Investment Luxemburg S.A. Luxembourg 100.0 100.0 7 46,972 

CICM Fund Management Limited Dublin 100.0 100.0 7 4,578 

COMINVEST Asset Management GmbH Frankfurt am Main 100.0 100.0 7 121,351 

Commerz Asset Management Asia Pacific Pte Ltd. Singapore 100.0 100.0 S$ 29,152 

Commerz Advisory Management Co. Ltd. British Virgin Islands 100.0 100.0 TWD 472,271 

Commerzbank Asset Management Asia Ltd. 

Commerz International Capital 

Singapore 100.0 100.0 S$ 31,284 

Management (Japan) Ltd. Tokyo 100.0 100.0 ¥ 467,375

168 NOTES 




in % in % 

European Bank for Fund Services GmbH (ebase) Haar near Munich 100.0 100.0 7 39,018 

CBG Commerz Beteiligungsgesellschaft Holding mbH Bad Homburg v.d.H. 100.0 7 6,137 

CBG Commerz Beteiligungsgesellschaft mbH Frankfurt am Main 100.0 100.0 7 12,244 

Commerz Business Consulting AG Frankfurt am Main 100.0 7 3,899 

Commerz Equity Investments Ltd. London 100.0 £ 50,012 

Commerz Futures, LLC. Wilmington/Delaware 100.0 1.0 US$ 15,145 

Commerz Grundbesitzgesellschaft mbH Wiesbaden 100.0 7 109,147 

Commerz Grundbesitz-Investmentgesellschaft mbH Wiesbaden 75.0 75.0 7 46,033 

Commerz Securities (Japan) Company Ltd. 


Hong Kong/Tokyo 100.0 ¥ 7,534,302 

für Kundenbetreuung mbH Quickborn 100.0 7 26 

Commerzbank (Budapest) Rt. Budapest 100.0 Ft 14,933,298 

Commerzbank (Eurasija) SAO Moscow 100.0 Rbl 1,169,041 

Commerzbank (South East Asia) Ltd. Singapore 100.0 7 125,514 

Commerzbank Auslandsbanken Holding AG Frankfurt am Main 100.0 7 3,571,458 

Commerzbank (Nederland) N.V. Amsterdam 100.0 100.0 7 227,097 

Commerzbank (Switzerland) Ltd Zurich 100.0 100.0 sfr 207,159 

Commerzbank International S.A. Luxembourg 100.0 100.0 7 1,154,812 

Commerzbank Belgium S.A. N.V. Brussels 100.0 7 44,923 

Commerzbank Capital Markets (Eastern Europe) a.s. Prague 100.0 Kc˘ 533,318 

Commerzbank Capital Markets Corporation New York 100.0 US$ 190,136 

Commerzbank Europe (Ireland) Unlimited Dublin 44.0 4.0 7 534,348 

Commerz Europe (Ireland), Inc. Wilmington/Delaware 100.0 100.0 US$ 5 

Commerzbank Europe Finance (Ireland) plc 

Commerzbank Immobilien- und 

Dublin 100.0 100.0 7 47 

Vermögensverwaltungsgesellschaft mbH Frankfurt am Main 100.0 7 30 

Commerzbank Inlandsbanken Holding AG Frankfurt am Main 100.0 7 2,482,491 

comdirect bank Aktiengesellschaft (sub-group) Quickborn 58.7 58.7 7 559,531 

comdirect ltd. London 100.0 100.0 

comdirect private finance AG Quickborn 100.0 100.0 

Commerzbank Overseas Finance N.V. Curaçao 100.0 7 1,089 

CommerzLeasing und Immobilien AG (sub-group) Düsseldorf 100.0 94.5 7 97,223 

ASTRIFA Mobilien-Vermietungsgesellschaft mbH Düsseldorf 100.0 100.0 

CFB Commerz Fonds Beteiligungsgesellschaft mbH Düsseldorf 100.0 100.0 

CFB Verwaltung und Treuhand GmbH Düsseldorf 100.0 100.0 

COBA Vermögensverwaltungsgesellschaft mbH Düsseldorf 100.0 100.0 

CommerzProjektconsult GmbH Frankfurt am Main 100.0 100.0 

Commerz Immobilien GmbH Düsseldorf 100.0 100.0 

CommerzBaucontract GmbH Düsseldorf 100.0 100.0 

CommerzBaumanagement GmbH 

CommerzBaumanagement GmbH und 

CommerzImmobilien GmbH GbR 

Düsseldorf 100.0 100.0 

– Neubau Molegra Düsseldorf 100.0 100.0


NOTES 169 



in % in % 

CommerzLeasing Mobilien GmbH Düsseldorf 100.0 100.0 

CommerzLeasing Auto GmbH Düsseldorf 100.0 100.0 

CommerzLeasing Mietkauf GmbH Düsseldorf 100.0 100.0 

FABA Vermietungsgesellschaft mbH Düsseldorf 95.0 95.0 

Hansa Automobil Leasing GmbH Hamburg 100.0 100.0 

NESTOR GVG mbH & Co. Objekt ITTAE Frankfurt KG Düsseldorf 100.0 95.0 

NOVELLA GVG mbH Düsseldorf 100.0 100.0 

SECUNDO GVG mbH 

CORECD Commerz Real Estate 

Düsseldorf 100.0 100.0 

Consulting and Development GmbH 

Erste Europäische Pfandbrief- und Kommunal- 

Berlin 100.0 48.8 7 999 

kreditbank Aktiengesellschaft in Luxemburg Luxembourg 75.0 7 53,743 

Gracechurch TL Ltd. London 100.0 7 20,049 

Hypothekenbank in Essen AG Essen 51.0 7 665,039 

Montgomery Asset Management, LLC San Francisco/ 

Wilmington 100.0 0.3 US$ 11,479 

OLEANDRA Grundstücks-Vermietungsgesellschaft 

mbH & Co., Objekt Jupiter KG 

OLEANDRA Grundstücks-Vermietungs- 

Düsseldorf 100.0 7 13,640 

gesellschaft mbH & Co., Objekt Luna KG 


Düsseldorf 100.0 7 1,918 

gesellschaft mbH & Co., Objekt Neptun KG 


Düsseldorf 100.0 7 6,396 

gesellschaft mbH & Co., Objekt Pluto KG 


Düsseldorf 100.0 7 21,750 

gesellschaft mbH & Co., Objekt Uranus KG 


Düsseldorf 100.0 7 23,818 

gesellschaft mbH & Co., Objekt Venus KG Düsseldorf 100.0 7 13,374 

P.T. Bank Finconesia Jakarta 51.0 Rp. 182,894,000 

Service-Center Inkasso GmbH Düsseldorf Düsseldorf 100.0 7 125 

Stampen S.A. Brussels 99.4 7 11,001 

von der Heydt-Kersten & Söhne Wuppertal-Elberfeld 100.0 7 5,113

170 NOTES 

Associated companies included in the consolidation at equity 



in % in % 

Capital Investment Trust Corporation 

Commerz Unternehmensbeteiligungs- 

Taipei/Taiwan 24.3 5.0 TWD 1,338,191 

Aktiengesellschaft Frankfurt am Main 40.0 7 118,609 

ComSystems GmbH Düsseldorf 49.0 49.0 7 –492 

COMUNITHY Immobilien AG Düsseldorf 49.9 49.9 7 –6,294 

Deutsche Schiffsbank Aktiengesellschaft Bremen/Hamburg 40.0 40.0 7 372,787 

Eurohypo Aktiengesellschaft 

ILV Immobilien-Leasing 

Frankfurt am Main 31.8 31.8 7 4,736,542 

Verwaltungsgesellschaft Düsseldorf mbH Düsseldorf 50.0 47.0 7 28,124 

IMMOPOL GmbH & Co. KG 

KEB Commerz Investment 

Munich 40.0 40.0 7 0 

Trust Management Co. Ltd. Seoul 45.0 W 32,483,672 

Prospect Poland UK, L.P. St.Helier/Jersey 39.1 1.2 US$ 4,505 

Second Interoceanic GmbH Hamburg 24.8 24.8 7 102,207 

Special-purpose entities and non-publicly-offered funds included in the consolidation pursuant to IAS 27 and SIC-12 

Name Seat/ Share of capital Equity 

seat of held or share of or fund’s 

management investor in fund assets 

Special-purpose entities 

company in % in 1,000 

Comas Strategy Fund I Limited Grand Cayman 0.0 US$ 0 

Four Winds Funding Corporation Wilmington/Delaware 0.0 US$ –5,983 

Hanging Gardens 1 Limited Grand Cayman 0.0 7 7 

Plymouth Capital Limited St.Helier/Jersey 0.0 7 0 

Non-publicly-offered funds 

ABN AMRO-Credit Spread-Fonds Frankfurt am Main 100.0 7 107,800 

CDBS-Cofonds Frankfurt am Main 100.0 7 105,183 

CICO-Fonds I Frankfurt am Main 100.0 7 122,219 

CICO-Fonds II Frankfurt am Main 100.0 7 229,072 

Commerzbank Alternative Strategies-Global Hedge Luxembourg 100.0 US$ 110,095 

dbi-Fonds HIE1 Frankfurt am Main 100.0 7 104,442 

DEGEF-Fonds HIE 1 Frankfurt am Main 100.0 7 112,803 

DEVIF-Fonds Nr. 533 Frankfurt am Main 100.0 7 158,336 

GRUGAFONDS Anteile Munich 100.0 7 104,750 

HIE-Cofonds I Frankfurt am Main 100.0 7 88,712 

HIE-Cofonds II Frankfurt am Main 100.0 7 168,541 

HIE-Cofonds III Frankfurt am Main 100.0 7 168,538 

HIE-Cofonds IV Frankfurt am Main 100.0 7 84,354

Other major companies not included in the consolidation 

NOTES 171 



in % in % 

ALNO Aktiengesellschaft Pfullendorf 28.7 7 15,709 

Regina Verwaltungsgesellschaft Munich 25.0 25.0 7 403,847 

Frankfurt am Main, March 5, 2004 

The Board of Managing Directors

172 

Group Auditors' report 

We have audited the consolidated financial statements 

of Commerzbank Aktiengesellschaft, Frankfurt am Main, 

consisting of the balance sheet, the income statement and 

the statements of changes in equity and cash flows as well 

as the notes to the financial statements for the business 

year from January 1 to December 31, 2003. The preparation 

and the content of the consolidated financial statements 

according to International Financial Reporting 

Standards of the IASB (IFRS) are the responsibility of 

the Company’s Board of Managing Directors. Our responsibility 

is to express an opinion, based on our audit, 

whether the consolidated financial statements are in 

accordance with IFRS. 

We conducted our audit of the consolidated financial 

statements in accordance with German auditing regulations 

and generally accepted standards for the audit 

of financial statements promulgated by the Institut 

der Wirtschaftsprüfer (IDW), and additionally observed 

the International Standards on Auditing (ISA). Those 

standards require that we plan and perform the audit to 

obtain reasonable assurance about whether the consolidated 

financial statements are free of material misstatements. 

Knowledge of the business activities and the economic 

and legal environment of the Group and evaluations 

of possible misstatements are taken into account in 

the determination of audit procedures. The evidence supporting 

the amounts and disclosures in the consolidated 

financial statements are examined on a test basis within 

the framework of the audit. The audit includes assessing 

the accounting principles used and significant estimates 

made by the Board of Managing Directors, as well as 

evaluating the overall presentation of the consolidated 

financial statements. We believe that our audit provides a 

reasonable basis for our opinion. 

In our opinion, the consolidated financial statements 

give a true and fair view of the net assets, financial position, 

results of operations and cash flows for the business 

year in accordance with IFRS. 

Our audit, which according to German auditing rules 

also extends to the Group management report prepared 

by the Board of Managing Directors for the business year 

from January 1 to December 31, 2003, has not led to any 

reservations. In our opinion, on the whole the Group management 

report together with the other information of 

the consolidated financial statements provides a suitable 

understanding of the Group’s position and suitably presents 

the risks of future development. In addition, we confirm 

that the consolidated financial statements and the 

Group management report for the business year from 

January 1 to December 31, 2003 satisfy the conditions 

required for the Company’s exemption from its duty to 

prepare consolidated financial statements and the Group 

management report in accordance with German accounting 

law. 


PwC Deutsche Revision 

Aktiengesellschaft 

Wirtschaftsprüfungsgesellschaft 

(Friedhofen) (Rausch) 

Wirtschaftsprüfer Wirtschaftsprüfer 

(German public (German public 

accountant) accountant)

Martin Kohlhaussen 

Report of the Supervisory Board 

Dear shareholders, 

In the past business year, we carried out our full duties under the law and the 

Bank’s statutes – advising and monitoring the Board of Managing Directors in 

their conduct of the Bank’s affairs. We were included in all the Bank’s major decisions 

requiring the approval of the Supervisory Board. The Board of Managing 

Directors informed us regularly, promptly and extensively, in both written and 

verbal form about business progress, strategy and corporate planning, as well 

as about all transactions of major significance for the Bank and the Group. We 

held particularly detailed discussions on the outcome of special meetings of the 

Board of Managing Directors, presented to us by the latter. The Supervisory 

Board or its committees approved measures of the Board of Managing Directors 

wherever such approval was required by law. In addition, the Chairman of the 

Supervisory Board maintained close contact with the Board of Managing Directors, 

and especially with its Chairman. He received the minutes of meetings of 

the Board of Managing Directors together with the proposed resolutions, and 

had himself constantly informed about the current business and risk situation 

and also on all important occurrences for the Bank. 

All told, we held six meetings in the past financial year and had intensive 

discussions with the Board of Managing Directors on the business situation. 

No member of the Supervisory Board attended fewer than half of the meetings. 

No conflicts of interest occurred in the year under review. 

173

174 REPORT OF THE SUPERVISORY BOARD 

Main points dealt with 

At plenary sessions, we arranged for regular reports on the implementation of 

the Bank’s cost-cutting programmes and discussed the planned and adopted 

measures in depth with the Board of Managing Directors. We noted with appreciation 

the great progress made by the Bank in this respect. We found it especially 

positive that the Board of Managing Directors managed to realize the 

resolved staff reductions in the year under review practically without having to 

dismiss personnel. 

We dealt repeatedly and in some detail with the changes in the German 

and international banking scene as well as the resulting strategic options for 

Commerzbank, discussing possible measures and alternatives with the Board of 

Managing Directors. We support the efforts of the Board of Managing Directors 

to achieve a sustained improvement in the Bank’s earnings power in this difficult 

economic setting. Asset management and retail banking in particular produced 

encouraging results. We received detailed reports on the Asset Management and 

Corporate Banking areas. 

An intensive discussion was triggered by Commerzbank’s revaluation measure 

in autumn 2003, when the Bank freed itself from unrealized losses by 

writing down altogether 72.3bn on the book value of investments and subsequently 

effecting a capital increase. We had the Board of Managing Directors 

explain the reasons for this measure in detail and discussed it with them at 

length. After exhaustive consultation, we supported the transaction in the interest 

of creating the conditions for dynamic growth on the part of the Bank. 

Work in the committees 

The Presiding Committee met five times altogether in the year under review. It 

also adopted four resolutions outside meetings. Apart from business progress 

and the individual business lines, its main topic was the revaluation measure. 

The Presiding Committee dealt with personnel issues relating to the Board of 

Managing Directors and had the latter report on all strategic decisions and also 

on the outcome of internal auditing. Insofar as the Presiding Committee covered 

topics which were also treated at plenary sessions, it discussed them in more 

detail. 

Last year, the Risk Committee devoted itself intensively in four meetings to 

the Bank’s risk management. In addition to the general risk of the Commerzbank 

Group, detailed reports on major credit exposures were presented at the meetings. 

The members received regular risk reports. Discussion focused on approving 

a Risk Manual describing the Bank’s risk policy and on implementing the 

Minimum requirements for the lending business of credit institutions (MaK). The 

Risk Committee also dealt with credits requiring its approval. A further topic was 

the changes in the Bank’s investments portfolio. At its meetings, the Risk Committee 

received reports on the planned measures and also the current position. 

As a very quick decision was often needed in order to conclude transactions, the 

Risk Committee adopted six resolutions in all during the year under review by 

circulating the documents instead of convening a meeting. 

The Audit Committee met five times altogether in the past year, the auditors 

attending four of the meetings to report on their work. The Board of Managing 

Directors also provided information on issues relevant to the audit. Between 

meetings, the chairman of the Audit Committee was constantly in contact with

the auditors. The Committee subjected the financial statements and consolidated 

financial statements to intensive scrutiny, discussing these and the results 

of the audit with the auditors. The Audit Committee established the independence 

of the auditors before proposing their appointment to the AGM. It commissioned 

the appointed auditors to conduct the audit and after extensive 

discussion it reached agreement with them on the main points of the audit and 

their fee. 

The Social Welfare Committee met once in the 2003 business year and primarily 

received reports on staff reductions and their impact, as well as on other 

measures in the personnel and social welfare areas. The Conciliation Committee 

did not have to be convened in the year under review. 

The committees regularly reported on their work at plenary sessions. 


We frequently discussed the implementation of the German Corporate Governance 

Code. In November 2002, we issued a declaration of compliance pursuant 

to Art. 161, AktG together with the Board of Managing Directors, which was 

updated in February 2003. Last July’s amendments to the German Corporate 

Governance Code were taken into account in a declaration of compliance on 

November 11, 2003. A detailed report by the Board of Managing Directors and 

Supervisory Board on corporate governance at Commerzbank AG appears on 

pages 14-17 of this annual report. 

Financial statements and consolidated financial statements 

PwC Deutsche Revision Aktiengesellschaft Wirtschaftsprüfungsgesellschaft has 

audited the annual financial statements and the consolidated financial statements 

for the 2003 financial year, giving each their unqualified certification. The 

financial statements and the management report of the Parent Bank were prepared 

according to the accounting rules of the German Commercial Code (HGB), 

the consolidated financial statements and the Group management report according 

to International Accounting Standards (IAS). The financial statements 

and the consolidated financial statements, the Parent Bank’s management report 

and the Group management report were sent to all members of the Supervisory 

Board in good time. In addition, the members of the Audit Committee received 

the complete annexes and notes relating to the auditors’ reports. At today’s 

meeting, the Audit Committee considered the financial statements in detail. At 

our meeting today for this purpose, we also discussed and examined the documents 

at length. The auditors attended both meetings in order to explain the 

main findings of the audit and to be available for questions. 

In view of the final outcome of our own examination as well as that of the 

Audit Committee, we concur with the findings of the auditors. The financial 

statements of the Parent Bank and the Group have given rise to no objections. 

At today’s meeting, we approved the financial statements for the Parent Bank 

and the Group presented by the Board of Managing Directors, which accordingly 

may be regarded as adopted. 

REPORT OF THE SUPERVISORY BOARD 175

176 REPORT OF THE SUPERVISORY BOARD 

Changes in Board of Managing Directors and Supervisory Board 

With the close of the AGM on May 30, 2003, the five-year term of office of the 

members of the Supervisory Board came to an end. On the shareholder representative 

side, Hermann Josef Strenger and of the employee representatives 

Heinz-Werner Busch, Oswald Danzer, Hans-Georg Jurkat, Detlef Kayser, Dieter 

Klinger, Dr. Torsten Locher, Mark Roach, Werner Schönfeld and Alfred Seum 

did not seek re-election. We wish to thank these former members once again 

for their trustworthy and committed efforts on our Supervisory Board during the 

past term of office. 

On the shareholder representative side, Dr. jur. Heiner Hasford was newly 

elected to the Supervisory Board. Dr. Sergio Balbinot, Dr.-Ing. Otto Happel, 

Dr. h.c. Martin Kohlhaussen, Klaus Müller-Gebel, Dr. Erhard Schipporeit, Prof. 

Dr.-Ing. Ekkehard Schulz, Prof. Dr. Jürgen F. Strube, Dr. Klaus Sturany and 

Dr.-Ing. E.h. Heinrich Weiss were re-elected. In the election of employee representatives, 

which took place before the AGM, Uwe Foullong was re-elected. 

Hans-Hermann Altenschmidt, Herbert Bludau-Hoffmann, Astrid Evers, Daniel 

Hampel, Sonja Kasischke, Wolfgang Kirsch, Werner Malkhoff, Dr. Sabine Reiner 

and Uwe Tschäge are the new employee representatives on the Supervisory 

Board. 

In the constituent meeting immediately after the AGM, Dr. h.c. Martin 

Kohlhaussen was elected Chairman and Uwe Tschäge Deputy Chairman of the 

Supervisory Board. At this meeting, we also elected the members of the five 

committees of the Supervisory Board. 

For age reasons, Dr. Axel Frhr. v. Ruedorffer resigned from the Board of Managing 

Directors at the close of the last AGM. We are greatly indebted to him for 

his long and successful activity on behalf of the Group. Upon Dr. v. Ruedorffer’s 

retirement from the Board of Managing Directors, Dr. Eric Strutz assumed the 

function of Chief Financial Officer (CFO) as from June 1, 2003. His appointment 

as a member of the Board of Managing Directors, resolved by the Supervisory 

Board, will become effective on April 1, 2004. We also appointed Nicholas Teller 

to the Board of Managing Directors with effect from April 1, 2003. On the same 

date, the function of personnel director passed from Klaus M. Patig to Andreas 

de Maizière. 

We thank the Board of Managing Directors as well as all the Bank’s staff for 

their great commitment and efforts in the 2003 financial year. 


The Supervisory Board 

Martin Kohlhaussen 

Chairman

supervisory board 

Dr. Walter Seipp 

Honorary Chairman 



Chairman 


Uwe Tschäge 


Commerzbank AG 

Düsseldorf 

Hans-Hermann Altenschmidt 


Essen 


Managing Director 

Assicurazioni Generali S.p.A. 

Trieste 

Herbert Bludau-Hoffmann 

Trade Union Secretary 

Financial Services 

North Rhine-Westphalia 

ver.di Essen Branch 

Essen 

Astrid Evers 


Hamburg 

Uwe Foullong 

Head of Coordination 

Financial Services 

ver.di National Administration 

Berlin 

Daniel Hampel 


Berlin 


Luserve AG 

Lucerne 

Dr. jur. Heiner Hasford 

Member of the Board of 

Managing Directors 

Münchener Rückversicherungs- 

Gesellschaft AG 

Munich 

Sonja Kasischke 


Brunswick 

Wolfgang Kirsch 



Werner Malkhoff 




Bad Soden 

Dr. Sabine Reiner 

Trade Union Specialist 

Economic Policy 

ver.di National Administration 

Berlin 




E.ON Aktiengesellschaft 

Düsseldorf 


Chairman of the Board of 


ThyssenKrupp AG 

Duisburg 


Chairman of the 


BASF Aktiengesellschaft 

Ludwigshafen 




RWE Aktiengesellschaft 

Essen 




SMS Aktiengesellschaft 

Düsseldorf 

177

178 

Committees of the supervisory board 

Presiding Committee Dr. h.c. Martin Kohlhaussen, Chairman 



Uwe Tschäge 

Audit Committee Klaus Müller-Gebel, Chairman 





Risk Committee Dr. h.c. Martin Kohlhaussen, Chairman 




Social Welfare Committee Dr. h.c. Martin Kohlhaussen, Chairman 

Astrid Evers 

Daniel Hampel 


Uwe Tschäge 


Conciliation Committee Dr. h.c. Martin Kohlhaussen, Chairman 

(Art. 27, (3), German Co-determination Act) Werner Malkhoff 


Uwe Tschäge

central advisory board 

Dr.-Ing. Burckhard Bergmann 



E.ON Aktiengesellschaft 

Düsseldorf 



Ruhrgas Aktiengesellschaft 

Essen 

Dr. Michael E. Crüsemann 



OTTO (GmbH + Co KG) 

Hamburg 

Christian R. Eisenbeiss 



Holsten-Brauerei AG 

Hamburg 

Dr. Hubertus Erlen 



Schering AG 

Berlin 

Dietrich-Kurt Frowein 


Dr. Manfred Gentz 



DaimlerChrysler AG 

Stuttgart 

Prof. Dr.-Ing. E.h. Hans-Olaf Henkel 

President 

Leibniz-Gemeinschaft 

Berlin 

Dr.-Ing. Dr.-Ing. E.h. 

Hans-Peter Keitel 



HOCHTIEF AG 

Essen 

Uwe Lüders 

Wetzlar 

Friedrich Lürssen 

Chief Executive 

Fr. Lürssen Werft GmbH & Co. KG 

Bremen 

Wolfgang Mayrhuber 



Deutsche Lufthansa 

Aktiengesellschaft 

Cologne/Frankfurt am Main 

Friedrich Merz, MdB 

Lawyer 

C B H Rechtsanwälte 

Cologne/Berlin 

Dr. Jörg Mittelsten Scheid 

General Partner 

Vorwerk & Co. KG 

Wuppertal 

Dr. Christoph M. Müller 

Lawyer 

Member of the 

Shareholders’ Committee 

and the Supervisory Board 

Vaillant GmbH 

Remscheid 

Jürgen Radomski 



Siemens AG 

Munich 

Hans Reischl 



REWE-Zentral AG 

Cologne 


Bad Homburg 

Dr. Ernst F. Schröder 


Dr. August Oetker KG 

Bielefeld 

Dr.-Ing. Ulrich Schumacher 



Infineon Technologies AG 

Munich 

Dr. Walter Thiessen 



AMB Generali Holding AG 

Aachen 

Dr. Klaus Trützschler 



Franz Haniel & Cie. GmbH 

Duisburg 

Wilhelm Werhahn 


Wilh. Werhahn KG 

Neuss 

Dr. Wendelin Wiedeking 



Dr. Ing. h.c. F. Porsche AG 

Stuttgart 

179

180 

board of managing directors 

from left to right: 




Staff departments 

Accounting and Taxes 

Compliance and Security 

Corporate Communications 

and Economic Research 

Financial Controlling 

Internal Auditing 

Strategy and Controlling 


Staff department 

Risk Control 

Banking departments 

Credit Operations 


Global Credit Operations 

Real Estate 

Mehmet Dalman 

Banking department 

Securities 






Staff department 

Human Resources 

Service departments 

Global Operations 


Information Technology: 

IT Development 

IT Investment Banking 

IT Production 

IT Support 

Organization 

Transaction Banking 


Staff departments 

Group Treasury 

Legal Services 

Banking department 


Dr. Eric Strutz* 

Chief Financial Officer 

* The appointment by the 

Supervisory Board to the 


will become effective on 

April 1, 2004. 

BOARD OF MANAGING DIRECTORS 181 

Nicholas Teller 




Multinational Corporates

182 

regional board members 

Corporate customers 

Hermann Bürger 

(until March 31, 2004) 

Regions abroad 

USA, Canada, 

Latin America 

Andreas Kleffel 

Main branches 

Bielefeld, Cologne, 

Dortmund, Düsseldorf, 

Essen, Wuppertal 

Wojciech Kostrzewa 


Central and Eastern Europe, 

CIS 

Klaus Kubbetat 

Main branches 

Berlin, Dresden, 

Erfurt, Leipzig 

Burkhard Leffers 

Main branches 

Frankfurt, Mainz, 

Mannheim, Munich, 

Nuremberg, Stuttgart 

Michael J. Oliver 


Asia, Oceania 

Mariano Riestra 

Region abroad 

Western Europe 

Werner Weimann 

Main branches 

Bremen, Hamburg, 

Hanover, Kiel 

Region abroad 

Scandinavia 

chief information officer 

Frank Annuscheit 

Information Technology 


Private customers 

Joachim Hübner 

Main branches 

Bielefeld, Bremen, 

Cologne, Dortmund, 

Düsseldorf, Essen, 

Hamburg, Hanover, 

Kiel, Wuppertal 

Dr. Dirk Mattes 

Main branches 

Berlin, Dresden, 

Erfurt, Frankfurt, 

Leipzig, Mainz, 

Mannheim, Munich, 

Nuremberg, Stuttgart

group managers 

Jochen Appell 

Chief Legal Adviser 

Legal Services 

Jürgen Berger 

IT Development 

Udo Braun 

IT Investment Banking 

Dr. Thorsten Broecker 

Financial Controlling 

Peter Bürger 


Peter Bürger 

Risk Control 

Dr. Rudolf Duttweiler 

Group Treasury 

Klaus-Peter Frohmüller 


Global Operations 


Dr. Peter Hennig 


Dr. Bernhard Heye 

Human Resources 


Organization 

Dr. Sebastian Klein 


Hartwig Kock 

Internal Auditing 

Peter Kraemer 

IT Production 

Dr. Renate Krümmer 

Strategy and Controlling 

(as from March 15, 2004) 

Ulrich H. Leistner 


Corinna Barbara Linner 

Accounting and Taxes 

Torsten Lüttich 

Credit Operations 


Ulrich Ramm 

Corporate Communications and 

Economic Research 

Michael Schmid 

Global Credit Operations 

Dr. Friedrich Schmitz 


Hubert Spechtenhauser 

Real Estate 

Thomas Steidle 

Compliance and Security 

Roland Wolf 

IT Support 

Martin Zielke 


183

184 

managers of domestic main branches 

Berlin 

Klaus Heyer 

Jörg Schauerhammer 

Bielefeld 

Thomas Elshorst 

Edwin Kieltyka 

Bremen 

Carl Kau 

Wolfgang Schönecker 

Cologne 

Dr. Waldemar Abel 

Michael Hoffmann 

Dortmund 

Dieter Mahlmann 

Karl-Friedrich Schwagmeyer 

Dresden 

Wilhelm von Carlowitz 

Michael Koch 

Frank Schulz 

Düsseldorf 

Andreas Vogt 

Wolf Wirsing 

Erfurt 

Hans Engelmann 

Thomas Vetter 

Essen 

Manfred Breuer 

Manfred Schlaak 


Dr. Franz-Georg Brune 

Wilhelm Nüse 

Hamburg 

Erhard Mohnen 

Jürgen Werthschulte 

Hanover 

Dirk Dreiskämper 

Volker Schönfeld 

Kiel 

Peter Ahls 

Michael Goertz 

Leipzig 

Wilhelm Plöger 

Heinrich Röhrs 

Mainz 

Herbert Enders 

Michael Sonnenschein 

Mannheim 

Klaus Altenheimer 

Ilse Maria Arnst 

Dr. Mathias Ullrich 

Munich 

Franz Jung 

Hans-Peter Rien 

Nuremberg 

Bernd Grossmann 

Frank Haberzettel 

Stuttgart 

Hans-Jürgen Hirner 

René Kaselitz 

Dr. Gert Wünsche 

Wuppertal 

Paul Krüger 

Irmgard Röhm 

managers of larger corporates centres 

Düsseldorf 

Martin Fischedick 


Andreas Schmidt 

Hamburg 

François de Belsunce 

Munich 

Sven Gohlke 

Stuttgart 

Dr. Bernd Laber

managers of foreign branches 

Antwerp 

Philippe van Hyfte 

Atlanta 

Harry Yergey 

Barcelona 

Alois Brüggemann 

Brno 

Bronislav Hybl 

Brussels 

Erik Puttemans 

Felix Rüther 

Chicago 

Timothy J. Shortly 

Hong Kong 

Harald W. A. Vogt 

Johannesburg 

Götz Hagemann 

Cornelius Obert 

Labuan 

Geoff Ho 

London 

Chris Jolly 

Günter Jerger 

Los Angeles 

Christian Jagenberg 

Madrid 

Antonio Martínez 

Milan 

Cristina Sironi-Sommer 

New York 

Werner Bönsch 

Joachim Döpp 

Paris 

Lionel Caron 

Ulrich Thomas Bartoszek 

Prague 

Burkhard Dallosch 

Günter Steiner 

Shanghai 

Joachim G. Fuchs 

Singapore 

Dr. Thomas Roznovsky 

Tokyo 

Norio Yatomi 

board of trustees of commerzbank foundation 


Chairman 


Prof. Dr. Dr. h.c. mult. 

Jürgen Mittelstrass 

Constance 




Bad Soden 

Michael Hocks 


Executive Board 

Ulrich Ramm 

Dr. Christoph Uhsadel 

185

186 

managers of domestic group companies 

CBG Commerz Beteiligungsgesellschaft 

Holding mbH 

Dr. Gert Schorradt 

Dr. Armin Schuler 


Dr. Andre Carls 

Dr. Achim Kassow 

COMINVEST 


Dr. Volker Doberanzke 

Hans-Jürgen Löckener 

Wolfgang Plum 

Claus Weltermann 

Commerz Business Consulting AG 

Dr. Ralf Klinge 


mbH 

Dr. Detlev Dietz 

Arnold L. de Haan 


Immobilien AG 

Eberhard Graf 

Roland Potthast 

Günter Ress 

Hubert Spechtenhauser 


für Kundenbetreuung mbH 

Alberto Kunze 

Manfred Stock 

Hypothekenbank in Essen AG 

Michael Fröhner 

Harald Pohl 

Hubert Schulte-Kemper

managers of foreign group companies 

ADIG-Investment Luxemburg S.A. 

Luxembourg 

Heinrich Echter 

BRE Bank SA 

Warsaw 


Anton M. Burghardt 

Krzysztof Kokot 

Slawomir Lachowski 

Alicja Kos-Golaszewska 

Rainer Ottenstein 

(as from April 21, 2004) 

Wieslaw Thor 

CICM Fund Management Ltd. 

Dublin 

Peter Leisentritt 

Commerzbank (Budapest) Rt. 

Budapest 

Támas Hák-Kovács 

Oliver Sipeer 


Moscow 

Andreas D. Schwung 

Commerzbank Europe (Ireland) 

Dublin 

John Bowden 

Commerzbank International S.A. 

Luxembourg 

Bernd Holzenthal 

Adrien Ney 


Amsterdam 

Gerhard Liebchen 

Eugène v. d. Berg 



Singapore 

Michael J. Oliver 

Dr. Thomas Roznovsky 

Commerzbank (Switzerland) Ltd 

Zurich 

Wolfgang Perlwitz 

Wolfgang Präuner 

Geneva 

Jean-Pierre de Glutz 

Commerzbank Capital 

Markets Corporation 

New York 

Omar Bayoumi 

Bernd Loewen 

Commerz (East Asia) Ltd. 

Hong Kong 

Harald W. A. Vogt 

Commerz Securities (Japan) 

Company Ltd. 

Hong Kong/Tokyo 

Robert John Windsor 


Réescompte, S.A. 

Paris 

Hervé de Boisson 

Daniel Terminet 

Pierre Vincent 

Jupiter International Group plc 

London 

Jonathan Carey 

Edward Bonham Carter 

Marcus Nagel 

187

188 

regional advisory committees 

Baden-Württemberg 

Heinz Georg Baus 


Board of Directors 

Bauhaus AG, Zurich 

Mannheim 

Senator E.h. Hans Brandau 

Chairman of the Boards of 


Badischer Gemeinde- 

Versicherungs-Verband 

Badische Allgemeine 

Versicherung AG 

Karlsruhe 

Dr. Ulrich Brocker 

General Manager 

SÜDWESTMETALL 

Verband der Metall- und 

Elektroindustrie 

Baden-Württemberg e. V. 

Stuttgart 

Manfred Häner 

Member of the 

Group Executive Board 

Micronas Semiconductor 

Holding AG 

Zurich/Switzerland 

Dipl.-Ing. Jörg Menno Harms 

Chairman of the Executive Board 

Hewlett-Packard GmbH 

Böblingen 

Prof. Dr. Dr. Ulrich Hemel 

Chief Executive Officer 

Paul Hartmann AG 

Heidenheim 

Dr. Stefan von Holtzbrinck 


Georg von Holtzbrinck GmbH 

Publishing Group 

Stuttgart 

Dipl.-Ing. Bernhard Jucker 



ABB AG 

Mannheim 

Dr. Hermann Jung 



Voith AG 

Heidenheim 

Dipl.-Kaufmann Sigmund Kiener 

Managing Partner 

InFoScore Management- und 

Beteiligungs GmbH 

Baden-Baden 

Prof. Dr. Renate Köcher 


INSTITUT FÜR DEMOSKOPIE 

ALLENSBACH 

Allensbach am Bodensee 

Detlef Konter 

Manager 

Head of Finance and Accounting 

Robert Bosch GmbH 

Stuttgart 

Dr. Thomas Lindner 


and General Partner 

GROZ-BECKERT KG 

Albstadt (Ebingen) 

Hon. Senator 

Dr. h.c. Adolf Merckle 

Lawyer 

Proprietor Merckle/ratiopharm 

Group 

Blaubeuren 

Dipl.-Volkswirt Jörg-Viggo Müller 



Hugo Boss AG 

Metzingen 

Winfried Paul 

Vice-President 

Alcan Holdings Switzerland Ltd. 

Zurich/Switzerland 

Bernhard Schreier 



Heidelberger 

Druckmaschinen AG 

Heidelberg 

Georg Weisweiler 

Member of the Executive Board 

MAHLE GmbH 

Stuttgart 

Dr. Hans-Peter Wild 


Rudolf-Wild-Werke 

Eppelheim 

Kurt Wontorra 


Corposan Holding GmbH 

Baden-Baden

Bavaria 

Dr. Wilfried Backes 



EPCOS AG 

Munich 

Dr. Ferdinand Graf von Ballestrem 



MAN Aktiengesellschaft 

Munich 

Dipl.-Betriebswirt Dieter Bellé 



LEONI AG 

Nuremberg 

Frank A. Bergner 


Richard Bergner Holding 

GmbH & Co. KG 

Schwabach 

Dr. sc. pol. Wolfgang Colberg 


BSH Bosch und Siemens 

Hausgeräte GmbH 

Munich 

Klaus Conrad 

Partner 

Conrad Holding GmbH 

Hirschau 

Carl Friedrich Eckart 


ECKART GmbH & Co. KG 

Fürth (Bavaria) 

Peter J. Fischl 




Munich 

Dr. Reinhard Fuchs 



WWK Lebensversicherung a. G. 

WWK Allgemeine 


Munich 

Michael Glos, MdB 

Leader of 

CSU parliamentary group 

Deutscher Bundestag 

Berlin 

Dipl.-Wirtsch.-Ing. 

Dirk Heidenreich 


Semikron International 

Dr. Fritz Martin GmbH & Co. KG 

Nuremberg 

Rainer Hilpert 



GEMA Gesellschaft für 

musikalische Aufführungsund 

mechanische 

Vervielfältigungsrechte 

Munich 

Dipl.-Wirtsch.-Ing. Thomas Kaeser 


KAESER KOMPRESSOREN GmbH 

Coburg 

Prof. Dr. Anton Kathrein 

Managing General Partner 

KATHREIN-Werke KG 

Rosenheim 

Dr. Karl-Hermann Lowe 



Allianz Versicherungs-AG 

Munich 

REGIONAL ADVISORY COMMITTEES 189 

Dipl.-Ing. Thomas Netzsch 


Erich Netzsch GmbH & Co. 

Holding KG 

Selb 

Prof. Susanne Porsche 

Producer 

sanset Film & Fernsehproduktionen 

GmbH 

Munich 

Dr. Lorenz M. Raith 

Herzogenaurach 

Urs Rohner 



ProSiebenSat.1 Media AG 

Unterföhring 

Dipl.-Ing. Helmuth Schaak 



Leistritz AG 

Nuremberg 

Dr. Hans Seidl 



Vinnolit Kunststoff 

GmbH & Co. KG 

Ismaning 

Dr. Rudolf Staudigl 


Wacker-Chemie GmbH 

Munich 

Klaus Steger 



ERWO Holding AG 

Nuremberg

190 REGIONAL ADVISORY COMMITTEES 

Dr. Jürgen Terrahe 

Munich 

Dr. Klaus Warning 



SGL Carbon AG 

Wiesbaden 

Berlin 

Prof. Dr. Peter von Dierkes 

Berlin 

Dr. Peter E. Gutsche 

Member of the 

Administration Board 

Versorgungswerk der 

Zahnärztekammer Berlin 

Berlin 

Dipl.-Ing. Hermann Hauertmann 


Schwartauer Werke GmbH & Co. 

Kakao Verarbeitung Berlin 

Berlin 

Joachim Hunold 


Air Berlin GmbH & Co. 

Luftverkehrs KG 

Berlin 

Dipl.-Kaufmann Joachim Klein 


Umlauf & Klein Group 

GmbH & Co. 

Berlin 

Dipl.-Kaufmann Peter J. Klein 


Ärzte-Treuhand 

Vermögensverwaltung GmbH 

Berlin 

Dr. Hartmann Kleiner 

Lawyer 

Chief Manager 

VME Verband der Metall- und 

Elektro-Industrie in Berlin und 

Brandenburg e.V. 

Berlin 

Universitäts-Prof. Dr. Dr. h.c. mult. 

Heinz-Georg Klös 

Member of the 


Zoologischer Garten Berlin AG 

Berlin 

Hans-Ulrich Klose 

Member of 


Deputy Chairman of 

Foreign Affairs Committee 


Berlin 

Dr. Joachim Lemppenau 

Chairman of the Boards of 


Volksfürsorge Gruppe 

Hamburg 

Joachim Lubitz 



Vattenfall Europe AG 

Berlin 

Dr.-Ing. E.h. Hartmut Mehdorn 



Deutsche Bahn AG 

Berlin 

Dipl.-Volkswirt Manfred Neubert 


Willy Vogel AG 

Berlin 

Dipl.-Ing. Jürgen Reuning, MBA 

President 

Central & East European Area 

OTIS International 

Holdings GmbH 

Berlin 

Manfred Freiherr von Richthofen 

President 

Deutscher Sportbund 

Berlin 

Dr. Uwe Runge 

President of the Consistory 

Protestant Church of 

Berlin-Brandenburg 

Berlin 

Detlef Schulz 

Public Accountant and 

Tax Consultant 


alltreu GmbH 

Wirtschaftsprüfungsgesellschaft, 

Partner 

Detlef Schulz und Partner GbR 

Wirtschaftsprüfer, 

Rechtsanwälte, Steuerberater 

Berlin 

Dr. Attilio Sebastio 



Berlin-Chemie AG 

Berlin 

Dipl.-oec. Felix Strehober 

Manager 

Natural Gas, Finances and 

Project Development 

ZGG-Zarubezhgaz-Erdgashandel- 

Gesellschaft mbH 

Berlin 

Volker Ullrich 


Zuckerhandelsunion GmbH 

Berlin

Brandenburg 

Dipl.-Kaufmann Hubert Marbach 



Vattenfall Europe 

Mining & Generation AG 

Berlin and Senftenberg 

Hartmut Meyer, Minister (retired) 

Potsdam 

Dr. Rainer Peters 


E.DIS Aktiengesellschaft 

Fürstenwalde/Spree 

Bremen 

Edgar Grönda 

General Manager/Lawyer 

Schultze & Braun 

Rechtsanwaltsgesellschaft mbH 

Bremen 

Jürgen Holtermann 


bremenports GmbH & Co. KG 

Bremen 

Dipl.-Kaufmann Ulrich Mosel 


H. Siedentopf GmbH & Co. KG 

Bremen 

Senator Dr. Ulrich Josef Nussbaum 

Senat der Finanzen der 

Freien und Hansestadt Bremen 

Bremen 

Hillert Onnen 


BLG LOGISTICS 

GROUP AG & Co. KG 

Bremen 

Bernd Schopf 


BrainMedia GmbH & Co. KG 

Bremen 

Hamburg 

Thomas Cremer 


Peter Cremer Holding 

GmbH & Co. 

Hamburg 

Rainer Detering 


Finance and Accounting 

HELM AG 

Hamburg 

Kurt Döhmel 


Shell Deutschland Holding GmbH 

Hamburg 

Dr. Karin Fischer 

Majority Shareholder 

DKV EURO SERVICE 

GmbH & Co. KG 

Hamburg 

Herbert Fronert 



Volksfürsorge 

Versicherungsgruppe 

Hamburg 


Hansjoachim Fruschki 


Deutsche Angestellten- 

Krankenkasse 

Hamburg 

Mogens Granborg 

Executive Vice President 

Danisco A/S 

Copenhagen/Denmark 

Prof. Dr. Ernst Haider 


Verwaltungs-Berufsgenossenschaft 

Hamburg 

Hon. Senator Horst R. A. Hansen 

Member of the 


and Shareholders’ Committee 

Otto (GmbH & Co. KG) 

Hamburg 

Steffen Harpøth 

SHC – Steffen Harpøth Company 

London/United Kingdom 

Rolf Ide 



Heinrich Bauer Verlag KG 

Hamburg 

Dr. Thomas Klischan 

Chief Manager 

NORDMETALL Verband der 

Metall- und Elektroindustrie e.V. 

Hamburg, Schleswig-Holstein 

und Mecklenburg-Vorpommern 

Hamburg


Prof. Dr. Norbert Klusen 


Techniker Krankenkasse 

Hamburg 

Hans Jürgen Kuczera 


Lawyer 

Imtech Deutschland 

GmbH & Co. KG 

Hamburg 

Ralph P. Liebke 


Aon Jauch & Hübener 

Holdings GmbH 

Hamburg 

Hans Joachim Oltersdorf 



Fielmann AG 

Hamburg 

Dr. Cletus von Pichler 



Jungheinrich AG 

Hamburg 

Prof. Jobst Plog 

Director General 

Norddeutscher Rundfunk 

Hamburg 

Dr. Walter Richtberg 


dpa Deutsche Presse-Agentur 

GmbH 

Hamburg 

Erck Rickmers 


Nordcapital Holding 

GmbH & Cie. KG 

Hamburg 

Andreas Rost 



Holsten-Brauerei AG 

Hamburg 

Dipl.-Finanzwirt Albert C. Schmidt 


Hamburg 

Peter-Joachim Schönberg 



Behn Meyer Holding AG 

Hamburg 

Dr. Bernhard von Schweinitz 

Notary 

Notariat am Gänsemarkt 

Hamburg 

Prof. Dr. Fritz Vahrenholt 



REpower Systems AG 

Hamburg 

Dr. Gerd G. Weiland 

Lawyer 

Hamburg 

Karl Udo Wrede 



Ganske Verlagsgruppe GmbH 

Hamburg 

Dipl.-Kaufmann 

Hans-Joachim Zwarg 



Phoenix AG 

Hamburg 

Hesse 

Manfred Behrens 



Volksfürsorge 

Versicherungsgruppe 

Hamburg 


Heinz-Werner Binzel 



RWE Energy AG 

Dortmund 

Dr. Erich Coenen 


Dr. Harald Dombrowski 


EKF Finanz Frankfurt GmbH 

Hofheim-Wallau 

Norbert Fiebig 


Deutsches Reisebüro GmbH 


Dr. Rolf-Jürgen Freyberg 


BGAG Beteiligungsgesellschaft 

der Gewerkschaften AG 


Dr. Jürgen W. Gromer 

President 

Tyco Electronics Corporation 

Bensheim 

Gerd Grünenwald 

Group Managing Director/ 


Goodyear Dunlop Tires 

Germany GmbH 

Hanau


Wolfgang Gutberlet 


tegut… Gutberlet Stiftung & Co. 

Fulda 

Wolf Hoppe 


HOPPE AG 

Stadtallendorf 

Roland D’Ieteren 

Président 

SA D’Ieteren NV 

Brussels 

Dr. Dagobert Kotzur 


Schunk GmbH 

Giessen 

Dipl.-Ing. Roland Lacher 



Singulus Technologies AG 

Kahl 

Jürgen Lemmer 

Bad Homburg v.d.H. 

Dr. Edgar Lindermann 



Samson AG 


Dipl.-Ing. Klaus K. Moll 



mg technologies ag 


Aleksander M.C. Ruzicka 


Central Europe & Africa 

Aegis Media GmbH & Co. KG 

Central Services 

Wiesbaden 

Dr. Hermann Otto Solms, MdB 



Berlin 

Dr. Dieter Truxius 


Heraeus Holding GmbH 

Hanau 

Alexander Wiegand 


WIKA Alexander Wiegand 

GmbH & Co. KG 

Klingenberg 

Lower Saxony 

Dr. Dirk Basting 

Member of the 


Sartorius AG 

Göttingen 

Kaj Burchardi 

Executive Director 

Sappi International S.A. 

Brussels 

Claas E. Daun 


DAUN & CIE. AG 

Rastede 

Dr. Heiner Feldhaus 



Concordia Versicherungsgesellschaft 

a.G. 

Hanover 

Jens Fokuhl 



Nordzucker AG 

Brunswick 


Klaus Friedland 

Hemmingen 

Dr.-Ing. Heinz Jörg Fuhrmann 



Salzgitter AG 

Salzgitter 

Herbert Haas 



Talanx AG 

Hanover 

Carl Graf von Hardenberg 



Hardenberg-Wilthen AG 

Nörten-Hardenberg 

Alfred Hartmann 

Captain and Shipowner 



Atlas Reederei AG 

Leer 

Albrecht Hertz-Eichenrode 


HANNOVER Finanz GmbH 

Hanover 

Andreas R. Herzog 


Bühler AG 

Uzwill/Switzerland 

Dipl.-Kaufmann Axel Höbermann 

Deputy Chairman of the 


Lucia Strickwarenfabrik AG 

Lüneburg


Ingo Kailuweit 


Kaufmännische Krankenkasse – 

KKH 

Hanover 

Dr. Gernot Kalkoffen 



Esso Deutschland GmbH 

Hamburg 

Dr. Joachim Kreuzburg 



Sartorius AG 

Göttingen 

Dr. Günter Mahlke 


Administration Committee 

Ärzteversorgung Niedersachsen 

Hanover 

Andreas Maske 


Maske AG 

Hamburg 

Dr. Volker von Petersdorff 


Executive Committee 

Altersversorgungswerk 

der Zahnärztekammer 

Niedersachsen 

Hanover 

Andreas Picolin 



Nordenia International AG 

Greven 

Friedrich Popken 



Popken Group 

Rastede 

Dipl.-Volkswirt Ernst H. Rädecke 


C. Hasse & Sohn, 

Inh. E. Rädecke GmbH & Co. 

Uelzen 

Joachim Reinhart 

President + COO 

Matsushita Electric Europe 

(HQ) Ltd. 

Wiesbaden 

Wolfgang Rusteberg 

Hannoversch Münden 

Dr. Peter Schmidt 


TROESTER GmbH & Co. KG 

Hanover 

Dipl.-Kaufmann Peter Seeger 

Manager 

Shared Service Center TUI AG 

Hanover 

Bruno Steinhoff 

Chairman 

Steinhoff International 

Holdings Ltd. 

Johannesburg/South Africa 

Reinhold Stöver 

Proprietor 

Stöver Group 

Wildeshausen 

Dr. rer. pol. Bernd Jürgen Tesche 


Solvay Deutschland GmbH 

Hanover 

Dipl.-Kaufmann Klaus Treiber 



CG Nordfleisch AG 

Hamburg 

Wilhelm Wackerbeck 



WERTGARANTIE 

Technische Versicherung AG 

Hanover 

Dipl.-Math. Hans-Artur Wilker 


Jos. L. Meyer GmbH 

Papenburg 

Mecklenburg-Western 

Pomerania 

Prof. Dr. med. Dietmar Enderlein 



MEDIGREIF-Unternehmensgruppe 

Greifswald 

North Rhine-Westphalia 

Jan A. Ahlers 



Ahlers AG 

Herford 

Theo Albrecht 

Member of the 

Administrative Board 

Aldi GmbH & Co. KG’s 

Essen 

Werner Andree 



Vossloh AG 

Werdohl

Dipl.-Betriebswirt 

A. Udo Bachmann 


GAGFAH 

Gemeinnützige Aktien- 

Gesellschaft für Angestellten- 

Heimstätten 

Essen 

Peter Bagel 


A. Bagel 

Düsseldorf, 

Bagel Druck GmbH & Co. KG 

Ratingen, 

Karl Rauch Verlag KG 

Düsseldorf 


Michael von Bartenwerffer 


Aug. Winkhaus GmbH & Co. KG 

Telgte 

Dr. Thomas Beck 



Renault Nissan Deutschland AG 

Brühl 

Wolfgang van Betteray 

Senior Partner 

Kanzlei Metzeler – van Betteray 

Rechtsanwälte – Steuerberater 

Düsseldorf 

Ulrich Bettermann 


OBO Bettermann GmbH & Co. 

Menden 

Dr. Uwe Bilstein 


UGA-Niederrhein GmbH 

Straelen 

Dr. rer. comm. Wolfgang Böllhoff 


Wilhelm Böllhoff GmbH & Co. KG 

Bielefeld 

Dieter Bongert 

Chief Town Clerk (retired) 


Ruhrverband 

Essen 

Wilhelm Bonse-Geuking 



Deutsche BP AG 

BP Group Vice-President Europe 

Bochum 

Dipl.-Volkswirt Peter Bosbach 


Schäfer Werke GmbH 

Neunkirchen 

Hans-Jürgen Bremer 

Executive Board Member 

Kirchliche Zusatzversorgungskasse 

Rheinland-Westfalen 

Gemeinsame Versorgungskasse 

für Pfarrer und Kirchenbeamte 

Dortmund 

Dr. Joachim Breuer 

Chief Manager 

Hauptverband der gewerblichen 

Berufsgenossenschaften 

Sankt Augustin 

Norbert Brodersen 

Member of the 


KM Europa Metal AG 

Osnabrück 

Holger Brückmann-Turbon 


Turbon AG 

Hattingen 


Dr. Klaus Bussfeld 

Gelsenkirchen 

Rudolph Erbprinz von Croÿ 

Herzog von Croÿ’sche 

Verwaltung 

Dülmen 

Jörg Deisel 

Management Consultant 

Witten 

Dr. jur. Hansjörg Döpp 

Chief Manager 

Verband der Metallund 

Elektro-Industrie 

Nordrhein-Westfalen e.V. and 

Landesvereinigung der 

Arbeitgeberverbände 

Nordrhein-Westfalen e.V. 

Düsseldorf 

Klaus Dohle 


Dohle Handelsgruppe Service 

GmbH & Co. KG 

Siegburg 

Dr. Udo Eckel 


V & I Management 

GmbH & Co. KG, 


BFH Beteiligungsholding GmbH 

Wachtendonk 

Christian Eigen 

Deputy Chairman of the Board 

of Managing Directors 

MEDION AG 

Essen 

Jens Gesinn 



Ferrostaal AG 

Essen


Claes Göransson 


Vaillant GmbH 

Remscheid 

Dr. Hans-Ulrich Günther 


Deilmann-Montan GmbH 

Bad Bentheim 

Rüdiger Andreas Günther 


CLAAS KGaA mbH 

Harsewinkel 

Dieter Gundlach 


ARDEX GmbH 

Witten 

Margrit Harting 

Executive Manager 

Harting KGaA 

Espelkamp 

Dr. h.c. Erivan Karl Haub 


Tengelmann 

Warenhandelsgesellschaft 

Mülheim an der Ruhr 

Dr. Kurt Hochheuser 

Düsseldorf 

Prof. Dr. Bernd J. Höfer 

Deputy Chairman of the Board 

DLR Deutsches Zentrum für 

Luft- und Raumfahrt e.V. 

Cologne 

Hermann Hövelmann 



Mineralquellen und Getränke 

H. Hövelmann GmbH 

Duisburg 

Dr. Hans-Ulrich Holst 


RTL Television GmbH 

Cologne 

Dr. jur. Stephan J. Holthoff-Pförtner 

Lawyer and Notary 

Partner 

Hopf-Unternehmensgruppe 

Essen 


Hans-Dieter Honsel 

Chairman of the Board 

Honsel International 

Technologies S.a.r.l. 

Luxembourg 

Wilfried Jacobs 


AOK Rheinland – Die Gesundheitskasse 

Düsseldorf 

Heiner Kamps 


BHVG Beteiligungs- Beratungs- & 

Vermögensgesellschaft mbH 

Düsseldorf 

Dr. Hans-H. Kasten 




Aachen 

Dr. Gerhard Kinast 


Petro-Canada 

London 

Dr. Franz Josef King 


Saint-Gobain Glass 

Deutschland GmbH 

Aachen 

Dipl.-Ing. Dipl.-Wirtsch.-Ing. 

Dieter Köster 


Köster AG 

Osnabrück 

Gustav-Adolf Kümpers 

Partner 

F. A. Kümpers GmbH & Co. KG 

Kümpers GmbH & Co. 

Rheine 

Hans-Joachim Küpper 


Küpper Group 

Velbert/Heiligenhaus 

Kurt Küppers 


Hülskens GmbH & Co. KG 

Wesel 

Assessor Georg Kunze 


Landesverband Rheinland- 

Westfalen der gewerblichen 

Berufsgenossenschaften 

Düsseldorf 

Dipl.-Kaufmann Ulrich Leitermann 



SIGNAL IDUNA Group 

Dortmund/Hamburg 

Dr. Dirk Lepelmeier 


Nordrheinische Ärzteversorgung 

Düsseldorf 

Jyri Luomakoski 


Deputy Chief Executive Officer 

Uponor Corporation 

Vantaa/Finland

Klaus J. Maack 

ERCO Leuchten GmbH 

Lüdenscheid 

Dipl.-Kaufmann Peter Mazzucco 



Edscha AG 

Remscheid 

Dipl.-Kaufmann Helmut Meyer 



DEUTZ AG 

Cologne 

Friedrich Neukirch 


Klosterfrau Deutschland GmbH 

Cologne 

Dipl.-oec. Jan Peter Nonnenkamp 


Leopold Kostal GmbH & Co. KG 

Lüdenscheid 

Dipl.-oec. Bernd Pederzani 


EUROPART Holding GmbH 

Hagen 

Dipl.-Ing. Volkmar Peters 


Peters Beteiligungs 

GmbH & Co. KG 

Moers 


Eberhard Pothmann 

Executive Vice President 

Vorwerk & Co. KG 

Wuppertal 


Ulrich Reifenhäuser 


Reifenhäuser GmbH & Co. KG 

Maschinenfabrik 

Troisdorf 

Hans Reinert 

Member of the Advisory Board 

H. & E. Reinert 

Westfälische Privat-Fleischerei 

GmbH & Co. KG 

Versmold 

Dr. Joachim F. Reuter 


Gebrüder Trox GmbH 

Neukirchen-Vluyn 

Klaus H. Richter 


Barmer Ersatzkasse 

Wuppertal 

Robert Röseler 


ara Shoes AG 

Langenfeld 

Martin Rohm 



Volkswohl Bund Versicherungen 

Dortmund 

Peter Rostock 


BPW Bergische Achsen KG 

Wiehl 

Dipl.-Kaufmann Albert Sahle 


SAHLE WOHNEN 

Greven 


Hans Schafstall 


Schafstall Holding 

GmbH & Co. KG 

Mülheim an der Ruhr 

Peter Nikolaus Schmetz 


Schmetz Capital 

Management GmbH 

Aachen 

Heinz G. Schmidt 

Member of the 


Douglas Holding AG 

Hagen 

Dr. Peter Schörner 



RAG Aktiengesellschaft 

Essen 

Dipl.-Betriebswirt Horst Schübel 


Miele & Cie. KG 

Gütersloh 

Reinhold Semer 

Public Accountant and 


Partner 

Hellweg Group 

Die Profi-Baumärkte 

GmbH & Co. KG 

Dortmund 

Dr. Reiner Spatke 


Johnson Controls GmbH 

Burscheid


Werner Stickling 

Proprietor 

Nobilia-Werke 

J. Stickling GmbH & Co. KG 

Verl 

Karl-Heinz Stiller 


Wincor Nixdorf Holding GmbH 

Paderborn 

Dipl.-Kaufmann Christian Sutter 


A. Sutter GmbH 

Essen 

Dr. Wolfgang Theis 


Kiekert AG 

Heiligenhaus 

Detlef Thielgen 



Schwarz Pharma AG 

Monheim 

Dipl.-Kaufmann Eugen Timmer 



AVA Allgemeine Handelsgesellschaft 

der Verbraucher AG 

Bielefeld 

Dr. Hans-Georg Vater 



Hochtief AG 

Essen 

Michael Willems 



STEAG AG 

Essen 

Konsul 

Dipl.-Kaufmann Michael Wirtz 


Grünenthal GmbH, 

Partner 

Dalli-Werke Mäurer & Wirtz 

GmbH & Co. KG 

Stolberg 

Horst Wortmann 

p.h.G. Managing Partner 

Wortmann Schuh Holding KG 

Detmold 

Dipl.-Kaufmann Ulrich Ziolkowski 



ThyssenKrupp Technologies AG 

Essen 

Rhineland-Palatinate 

Benoît Claire 


Allgemeine Kredit Coface 

Holding AG 

Mainz 

Dipl.-Kaufmann Folkhart Fissler 


VESTA GmbH 

Idar-Oberstein 

Dr. Heinz Geenen 


KANN GmbH & Co. KG 

Baustoffwerke 

Bendorf 

Andreas Land 


Griesson – de Beukelaer 

GmbH & Co. KG 

Polch 

Dr. Eckhard Müller 


BASF Aktiengesellschaft 

Ludwigshafen 

Prof. Dr. Marbod Muff 

Member of the Management 

Finance and Personnel Divisions 

Boehringer Ingelheim GmbH 

Ingelheim am Rhein 

Matthäus Niewodniczanski 


Bitburger Getränke 

Verwaltungsgesellschaft mbH 

Bitburg 

Karlheinz Röthemeier 


Verlagsgruppe Rhein Main 

GmbH & Co. KG 

Mainz 

Klaus Rübenthaler 



Schott Glas 

Mainz 

Dipl. oec. Berta Schuppli 

Partner 

Helvetic Grundbesitzverwaltung 

GmbH 

Wiesbaden 

Hans Joachim Suchan 

Administrative Director 

ZDF 

Mainz 

Herbert Verse 

Nieder-Olm 

Dr. Alois Wittmann 



KSB Aktiengesellschaft 

Frankenthal

Saarland 


Wendelin von Boch-Galhau 



Villeroy & Boch AG 

Mettlach 

Dipl.-Kaufmann Thomas Bruch 


Globus Holding GmbH & Co. KG 

St. Wendel 

Dipl.-Kaufmann Christian Erhorn 

Business Manager 

Saarbrücker Zeitung 

Verlag und Druckerei GmbH 

Saarbrücken 

Sanitätsrat 

Dr. med. Franz Gadomski 

President 

Ärztekammer des Saarlandes 

Saarbrücken 

Dr. rer. oec. Michael Karrenbauer 



RAG Saarberg AG 

Saarbrücken 

Michel Maulvault 



AG der Dillinger Hüttenwerke 

Dillingen (Saar) 

Dipl.-Volkswirt Dr. Richard Weber 


Karlsberg Brauerei KG Weber 

Homburg (Saar) 

Saxony 

Linden Blue 


Spezialtechnik Dresden GmbH 

Dresden 

Karl Gerhard Degreif 


Stadtwerke Chemnitz AG 

Chemnitz 

Günter Errmann 


NARVA Lichtquellen 

GmbH & Co. KG 

Brand-Erbisdorf 

Dr. Friedrich Josef Glatzel 



envia Mitteldeutsche Energie AG 

Chemnitz 

Dr. Wolfgang Gross 


f i t GmbH 

Hirschfelde 

Konsul Dr.-Ing. Klaus-Ewald Holst 


VNG-Verbundnetz Gas AG 

Leipzig 

Dr. Hans J. Naumann 


Niles-Simmons 

Industrieanlagen GmbH, 


Niles-Simmons-Hegenscheidt 

GmbH 

Chemnitz 


Jürgen Preiss-Daimler 


P-D Management 

Consulting GmbH 

Preiss-Daimler Group 

Wilsdruff/Dresden 

Thilo von Selchow 


ZMD Zentrum Mikroelektronik 

Dresden AG 

Dresden 

Dipl.-Betriebswirtin 

Angelika Spreng 


StarragHeckert GmbH 

Chemnitz 

Rolf Steinbronn 


AOK Sachsen 

Dresden 

Prof. Hanspeter Stihl 

Dresden 

Axel F. Strotbek 


Volkswagen Sachsen GmbH 

Zwickau 

Holger Tanhäuser 

Administrative Director 

Mitteldeutscher Rundfunk 

Leipzig


Saxony-Anhalt 

Dr.-Ing. Klaus Hieckmann 


Symacon Engineering 

Barleben/Magdeburg, 

President 

Magdeburg Chamber of Industry 

and Commerce 

Magdeburg 

Hans Hübner 


Unternehmensgruppe Hübner 

Neugattersleben 

Heiner Krieg 


MIBRAG mbH 

Theissen 

Schleswig-Holstein 

Prof. Dr. Hans Heinrich Driftmann 


Peter Kölln 

Kommanditgesellschaft 

auf Aktien 

Elmshorn 

Volker Friedrichsen 


BGZ Beteiligungsgesellschaft 

Zukunftsenergien AG 

Husum 

Lothar-Joachim Jenne 


Max Jenne Arzneimittel- 

Grosshandlung KG 

Kiel 

Dr. jur. Klaus Murmann 

Chairman 

Sauer-Danfoss Inc. 

Neumünster 

Lincolnshire, Illinois/USA 

Dr. Lutz Peters 


AOH Nahrungsmittel 

GmbH + Co. KG 

Bad Schwartau 

Hans Wilhelm Schur 

Group Director 

Schur International a/s 

Horsens/Denmark 

Dr. Ernst J. Wortberg 


L. Possehl & Co. mbH 

Lübeck 

Thuringia 

Reinhard Böber 


Glatt Ingenieurtechnik GmbH 

Weimar 

Dr. Hans-Werner Lange 


TUPAG-Holding AG 

Mühlhausen 

Klaus Lantzsch 



FER Fahrzeugelektrik GmbH 

Eisenach 

Dr.-Ing. Michael Militzer 


MITEC Automotive AG 

Eisenach 

Eugeen Theunis 



THEUMA NV 

Bekkevoort/Belgium 

Andreas Trautvetter 

Minister of the Interior 

Free State of Thuringia 

Erfurt

seats on supervisory boards 

and similar bodies 

Members of the Board of 

Managing Directors of 


Information pursuant to Art. 285, 

no. 10, HGB 

As of December 31, 2003 

a) Seats on mandatory supervisory boards 

b) Seats on similar bodies 


a) Ford Deutschland Holding GmbH 

Ford-Werke AG 

Linde AG* ) 

Steigenberger Hotels AG 

b) Assicurazioni Generali S.p.A.* ) 

Parker Hannifin Corporation* ) 

within Commerzbank Group: 


(Chairman) 

Commerzbank (Switzerland) Ltd 

(Chairman) 


a) AMB Generali Holding AG* ) 

EUROHYPO AG* ) 

Heidelberger 

Druckmaschinen AG* ) 

ThyssenKrupp Services AG 



(Chairman) 

Commerzbank Inlandsbanken 

Holding AG 

(Chairman) 

b) within Commerzbank Group: 

CFM Commerz Finanz 

Management GmbH i.L. 

(Chairman) 



Finanzprodukte GmbH 

(Chairman) 

Mehmet Dalman 

a) Deutsche Börse AG* ) 

b) Tosca Limited 

(non-executive director) 




(Chairman) 



(Chairman) 


a) ProSiebenSat.1 Media AG* ) 

Vaillant GmbH 



mbH 

(Chairman) 

Commerz Grundbesitz- 

Investmentgesellschaft mbH 

(Chairman) 

Commerz Grundbesitz 

Spezialfondsgesellschaft mbH 

(Chairman) 


Immobilien AG 

(Chairman) 



(Chairman) 


a) ABB AG 

Borgers AG 

efiport (Educational Financial 

Portal) AG 

MAN AG* ) 

RAG Saarberg AG 

Rheinische Bodenverwaltung AG 

(Chairman) 

RWE Power AG 

Thyssen Krupp Stahl AG 



b) Arenberg-Schleiden GmbH 

(Chairman) 

BVV Versicherungsverein 

des Bankgewerbes a.G. 


BRE Bank SA 

(Deputy chairman) 


(Chairman) 


a) Ferrostaal AG 

G. Kromschröder AG* ) 



COMINVEST 


(Chairman) 

Pensor Pensionsfonds AG 


201

202 SEATS ON OTHER BOARDS 

b) Fördergesellschaft für Börsen 

und Finanzmärkte in Mittelund 

Osteuropa mbH 


ADIG-Investment 


(Chairman) 

AFINA Bufete de Socios 

Financieros S.A. 


Réescompte S.A. 

(Chairman) 



Commerzbank Europe 

(Ireland) Unlimited 

(Chairman) 

Commerz Asset Management 

(UK) plc 

(Chairman) 



Jupiter International Group plc 

(Chairman) 

Korea Exchange Bank 

(non-standing director) 

Montgomery Asset 

Management, LLC 

Dr. Eric Strutz** ) 

a) within Commerzbank Group: 


COMINVEST 


Commerzbank Auslandsbanken 

Holding AG 

Commerzbank Inlandsbanken 

Holding AG 


Immobilien AG 



b) Banca Intesa S.p.A.* ) 



Erste Europäische Pfandbriefund 


Nicholas Teller 

a) within Commerzbank Group: 

Commerzbank Auslandsbanken 

Holding AG 

(Chairman) 

Commerz Unternehmensbeteiligungs-AG 


BRE Bank SA 

**) listed company outside group 

**) The appointment by the Supervisory Board to the Board of Managing Directors 

will become effective on April 1, 2004. 

Former members of the 



a) Allgemeine Kreditversicherung 

Coface AG 


Allgemeine Kredit Coface 

Holding AG 


AUDI AG* ) 

Commerz Unternehmensbeteiligungs-AG 

(Chairman) 



(Chairman) 

b) AKA Ausfuhrkredit- 

Gesellschaft mbH 

(2nd Deputy chairman) 

Avis Europe plc* ) 

HANNOVER Finanz GmbH 

Mediobanca – Banca di Credito 

Finanziario S.p.A.* ) 

Stiebel Eltron-Gruppe 

(Chairman) 

Viking Schiffsfinanz AG 

Viking Ship Finance 

(Overseas) Ltd. 


Erste Europäische Pfandbriefund 


(Chairman)

Members of the Supervisory 

Board of Commerzbank AG 

a) Seats on other mandatory 

supervisory boards 

b) Seats on similar bodies 


a) Bayer AG 

Heraeus Holding GmbH 

HOCHTIEF AG 



KARSTADT QUELLE AG 

(until May 2003) 

Linde AG (until May 2003) 

Schering AG 

ThyssenKrupp AG 

b) Verlagsgruppe 

Georg von Holtzbrinck GmbH 

Uwe Tschäge 

– 


– 


a) within group: 

Aachener und Münchener 

Lebensversicherung AG 

Aachener und Münchener 



b) within group: 

Banco Vitalicio de España, 

C.A. de Seguros y Réaseguros 

Europ Assistance Holding 

Generali China Life 

Insurance Co. Ltd. 

Generali España, Holding de 

Entidades de Seguros, S.A. 

(Chairman) 

Generali Finance B.V. 

Generali France S.A. 


(formerly: Generali France 

Holding S.A.) 

Generali Holding Vienna AG 


Generali (Schweiz) Holding 

Generali Sigorta S.A. 


(until July 31, 2003) 

G. F. Participations, S.A. 

(Chairman) 

(since August 13, 2003) 

La Estrella S.A. 

Migdal Insurance Co. Ltd. 

Migdal Insurance Holdings Ltd. 

Participatie Maatschappij 

Graafschap Holland N.V. 

Transocean Holding Corporation 

Herbert Bludau-Hoffmann 

– 

Astrid Evers 

– 

Uwe Foullong 

a) DBV-Winterthur Holding AG 

DBV-Winterthur 


Daniel Hampel 

– 


a) mg technologies AG 

SEATS ON OTHER BOARDS 203 


a) D.A.S. Deutscher Automobil 

Schutz – Allgemeine Rechtsschutz-Versicherungs-AG 

ERGO 

Versicherungsgruppe AG* ) 

Europäische 

Reiseversicherung AG 

(Chairman) 

MAN AG* ) 

(since May 2003) 

MAN Nutzfahrzeuge AG 

(until April 2003) 

Nürnberger Beteiligungs-AG* ) 

VICTORIA 


VICTORIA Versicherung AG 

WMF Württembergische 

Metallwarenfabrik AG* ) 

b) American Re Corporation 

Sonja Kasischke 

– 


a) Commerz Business 

Consulting AG 

(Chairman) 

b) COLLEGIUM GLASHÜTTEN 

Zentrum für Kommunikation 

GmbH 


– 


a) comdirect bank AG 


Deutsche Schiffsbank AG 


EUROHYPO AG 

Holsten-Brauerei AG

204 SEATS ON OTHER BOARDS 

Dr. Sabine Reiner 

– 


a) HDI Privatversicherung AG 

(until July 16, 2003) 

HDI V.a.G. 

Talanx AG 

(since June 27, 2003) 

within group: 

Degussa AG 

E.ON Energie AG 

(until April 3, 2003) 

VIAG Telecom AG 

Ruhrgas AG 

(since March 25, 2003) 

b) Connect Austria GmbH 

(until December 31, 2003) 

within group: 

E.ON Risk Consulting GmbH 

(Chairman) 


a) AXA Konzern AG* ) 

Deutsche Bahn AG 

MAN AG* ) 

RAG AG 

RWE Plus AG 

(until September 30, 2003) 

TUI AG* ) 

within group: 

ThyssenKrupp Automotive AG 

(Chairman) 

ThyssenKrupp Services AG 

(Chairman) 

(formerly: ThyssenKrupp 

Materials AG) 

ThyssenKrupp Steel AG 

(Chairman) 


ThyssenKrupp Budd Company 

*) listed company outside group 


a) Allianz Lebensversicherungs 

AG* ) 

BASF AG* ) 

(Chairman) 

(since May 6, 2003) 

Bayerische Motorenwerke AG* ) 

Bertelsmann AG 

Fuchs Petrolab 

(Chairman) 

(since June 5, 2003) 

Hapag-Lloyd AG 

HOCHTIEF AG* ) 

(until June 4, 2003) 

Linde AG* ) 


a) Hannover Rückversicherungs 

AG* ) 


RAG AG 

within group: 

Heidelberger Druckmaschinen AG 

(Chairman) 

(since September 12, 2003) 

RWE Dea AG 

(until October 31, 2003) 

RWE Power AG 

RWE Solutions AG 

(until September 30, 2003) 

RWE Energy AG 

(since October 1, 2003) 

RWE Umwelt AG 

(since July 18, 2003) 


RWE Innogy Holdings plc 

RWE Thames Water plc 

RWE Trading GmbH 


a) Deutsche Bahn AG 

Ferrostaal AG 


Voith AG 

within group: 

SMS Demag AG 

(Chairman) 

b) Thyssen-Bornemisza Group 

within group: 

Concast AG 

(Chairman) 

Concast Holding AG 

(Chairman) 

Former members of the 


Heinz-Werner Busch 

– 

Oswald Danzer 

– 

Hans-Georg Jurkat 

b) BVV Versicherungsverein des 

Bankgewerbes a.G. 

Detlef Kayser 

b) BVV Versicherungsverein des 

Bankgewerbes a.G. 

Dieter Klinger 

– 

Dr. Torsten Locher 

–

Mark Roach 

a) FIDUCIA 

Informationszentrale AG 

Werner Schönfeld 

– 

Alfred Seum 

– 

Hermann Josef Strenger 

– 

Employees of 


Information pursuant to Art. 340a, (4), 

no. 1, HGB 

As of December 31, 2003 

Jürgen Berger 



Manfred Breuer 

Isola AG 

Schumag AG 

Bernd Förster 

SE Spezial Electronic AG 

Herbert Huber 

Saarländische Investitionskreditbank 

AG 

Andreas Kleffel 

Honsel Management GmbH 

Dr. Sebastian Klein 

COMINVEST 





Immobilien AG 


Hochtief Construction AG (HTC) 

Peter Kroll 

SchmidtBank AG 

Klaus Kubbetat 


Immobilien AG 

Ulrich Leistner 

COMINVEST 





Immobilien AG 

Burkhard Leffers 

Kolbenschmidt Pierburg AG 

Dr. Dirk Mattes 






MEWA Textil-Service AG & Co. 

Management OHG 

SEATS ON OTHER BOARDS 205 

Wilhelm Nüse 

Rasmussen GmbH 

Michael Schmid 


Immobilien AG 

Dr. Friedrich Schmitz 

COMINVEST 


Dr. Gert Schorradt 

Carmeile AG 

Frank Schulz 

Woba Dresden GmbH 

Monika Serreck 

Spielbanken Niedersachsen 

GmbH 

Dr. Rainer Wedel 

JC INSITU 

Beteiligungsgesellschaft mbH 

Martin Zielke 

COMINVEST 







ConCardis GmbH

206 

glossary 

Asset-backed securities (ABS) 

Securities whose interest payment 

and repayment of principal 

are covered, or backed, by the 

underlying pool of claims. As a 

rule they are issued by a specialpurpose 

entity in securitized form. 

Assets held for dealing purposes 

Under this balance-sheet item, 

securities, promissory notes, 

foreign exchange and derivative 

financial instruments which are 

used for dealing purposes are 

shown. They appear at their fair 

value. 

Associated company 

A company included in the consolidated 

financial statements 

neither on a fully or partially 

consolidated basis, but rather 

according to the equity method; 

however, a company which is included 

in the consolidation has a 

significant influence on its business 

and financial policies. 

Available for sale 

A term used to refer to financial 

assets that may be disposed of. 

Back-testing 

A procedure for monitoring the 

quality of value-at-risk models. 

For this purpose, the potential 

losses projected by the VaR 

approach are examined over 

alengthy period to ascertain 

whether in retrospect they were 

not exceeded far more frequently 

than the applied confidence level 

would have suggested. 

Benchmarks 

Reference figures like indices, 

which are used, for instance, 

in portfolio management. For 

one thing, they can determine 

the direction of an investment 

strategy by providing the portfolio 

manager with orientation 

as regards the composition of 

portfolios. For another, they serve 

as a yardstick for investment performance. 

Business continuity planning 

A company’s emergency planning, 

covering all of its units. 

Cash flow hedge 

This entails covering the risk 

related to future interest payments 

from a floating-interest balance-sheet 

transaction by means 

of a swap. It is measured at fair 

value. 

Cash flow statement 

This shows the breakdown and 

changes in a company’s cash and 

cash equivalents during the business 

year. It is divided up into the 

items operating, investing and 

financing activities. 

Collateral agreement 

An agreement covering the security 

or collateral to be furnished. 

Confidence level 

The probability with which a 

potential loss will not exceed the 

loss ceiling defined by the valueat-risk. 


Corporate governance establishes 

guidelines for transparent corporate 

management and supervision. 

The recommendations of 

the German Corporate Governance 

Code create transparency 

and strengthen confidence in 

responsible management; in particular, 

they serve shareholder 

protection. 

Cost/income ratio 

This represents the ratio of operating 

expenses to income before 

provisioning, indicating the costefficiency 

of the company or of 

one of its business units. 

Credit default swap (CDS) 

A financial instrument for taking 

over the credit risk from a reference 

asset (e.g. a security or 

credit). For this purpose, the 

buyer of protection pays the seller 

of protection a premium and receives 

a compensation payment 

if a previously specified credit 

event occurs. 

Credit derivative 

A financial instrument whose 

value depends on an underlying 

claim, e.g. a loan or security. As 

arule, these contracts are concluded 

on an OTC basis. They are 

used in both proprietary trading 

and managing risk. The most frequently 

used credit derivative 

product is the credit default swap.

Credit-linked note (CLN) 

A security whose performance is 

tied to a credit event. CLNs are 

frequently part of a securitization 

transaction or serve to restructure 

credit risk in order to satisfy specific 

customer wishes. 

Credit VaR 

The concept stems from the 

application of the value-at-risk 

concept for market risk to the 

area of credit-risk measurement. 

In substantive terms, the credit 

VaR is an estimate of the amount 

by which the losses arising from 

credit risk might potentially 

exceed the expected loss within a 

single year; for this reason: also 

unexpected loss. This approach 

is based on the idea that the expected 

loss merely represents the 

long-term median value for loan 

losses, which may differ (positively 

or negatively) from the 

actual loan losses in the current 

business year. 

DAX 30 

Deutscher Aktienindex (German 

stock index), which covers the 

30 largest German blue chips with 

the highest turnover in official 

trading. 

Deferred taxes 

These are taxes on income to be 

paid or received in the future, 

resulting from discrepancies in 

assigned values between the balance 

sheet for tax purposes and 

the commercial balance sheet. 

At the time the accounts are 

prepared, they represent neither 

actual claims on nor liabilities to 

the tax authorities. 

Derivatives 

Financial instruments whose 

value depends on the value of 

another financial instrument. The 

price of the derivative is determined 

by the price of an underlying 

object (security, interest 

rate, currency, credit). These 

instruments offer greater possibilities 

for managing and 

steering risk. 

Due diligence 

The term is used to describe the 

process of intensive examination 

of the financial and economic 

situation and planning of a company 

by external experts (mostly 

banks, lawyers, auditors). In the 

run-up to an IPO or a capital increase, 

due diligence is needed 

before an offering prospectus can 

be compiled. 

Economic capital 

The amount which, to a high 

degree of certainty, is required to 

cover unexpected losses from 

risk-bearing items. It is not identical 

to equity as shown in the balance 

sheet or regulatory capital. 

At Commerzbank, credit risk, 

market risk, operational risk and 

business risk are all included 

in the calculation of economic 

capital. 

Embedded derivatives 

Embedded derivatives are components 

of an original financial 

instrument and inseparably linked 

to the latter, so-called hybrid 

financing instruments such as 

reverse convertible bonds. Legally 

and economically, they are bound 

up with one another. 

GLOSSARY 207 

Equity method 

A consolidation method in a 

group’s accounting to cover holdings 

in associated companies. The 

company’s pro-rata net profit/loss 

for the year is included in the consolidated 

income statement as 

income/loss from equity investments. 

Expected loss 

Yardstick for the potential loss of 

a loan portfolio which can be 

expected within a single year on 

the basis of historical loss data. 

Fair value 

The price at which financial 

instruments may be sold or purchased 

on fair conditions. For 

measurement purposes, either 

market prices (e.g. stock-exchange 

prices) or – if these are unavailable 

– internal measurement 

models are used. 

Fair value hedge 

This is a fixed-interest balancesheet 

item (e.g. a claim or a security) 

which is hedged against market 

risk by means of a swap. It is 

measured at fair value. 

Financial instruments 

Above all, credits or claims, interest-bearing 

securities, shares, 

equity investments, liabilities and 

derivatives are subsumed here. 

Futures 

The futures contract is a binding 

agreement committing both parties 

to deliver or take delivery of a 

certain number or amount of an 

underlying security or asset at a 

fixed price on an agreed date. 

Unlike options, futures contracts 

are very strongly standardized.

208 GLOSSARY 

Goodwill 

The difference between the purchase 

price and the value of the 

net assets thereby acquired, 

which remains after the hidden 

reserves have been disclosed 

when an equity investment is 

acquired or a company is taken 

over. 

Hedge accounting 

The presentation of discrepancies 

between the change in value of a 

hedging device (e.g. an interestrate 

swap) and the hedged item 

(e.g. a loan). Hedge accounting is 

designed to reduce the influence 

on the income statement of the 

measurement and recognition 

of changes in the fair value of 

derivative transactions. 

Hedging 

A strategy under which transactions 

are effected with the aim 

of providing cover against the risk 

of unfavourable price movements 

(interest rates, prices, commodities). 

International Accounting 

Standards (IAS) 

Accounting regulations approved 

by the International Accounting 

Standards Committee. The objective 

of financial statements prepared 

according to IAS is to provide 

investors with information to 

help them reach a decision with 

regard to the company’s asset and 

financial position and also its 

earnings performance, including 

changes in the course of time. 

By contrast, financial statements 

according to HGB (German Commercial 

Code) are primarily 

geared to investor protection. 

Investor relations 

The terms describes the dialogue 

between a company and its shareholders 

or creditors. Investor relations 

targets this special group 

with the intention of using communicative 

means to ensure an 

appropriate evaluation of the 

company by the capital market. 

Letter of comfort 

Usually, the commitment of a 

parent company towards third 

parties (e.g. banks) to ensure 

orderly business conduct on 

the part of its subsidiary and 

the latter’s ability to its meet 

liabilities. 

Liabilities from dealing activities 

Under this balance-sheet item, the 

derivative instruments of proprietary 

trading with a negative fair 

value appear, and also delivery 

commitments arising from the 

short-selling of securities. They 

are measured at fair value. 

Loss review trigger 

A warning signal that a trading 

unit might exceed its prescribed 

maximum loss. If this trigger is 

reached, appropriate measures 

are taken to prevent further 

losses. 

Mark-to-market 

Measurement of items at current 

market prices, including unrealized 

profits – without purchase 

costs being taken into consideration. 

Mergers & acquisitions 

In banking, M&A represents the 

advisory service offered to companies 

involved in such transactions, 

especially the purchase and 

sale of companies or parts of 

them. 

Mezzanine 

An Italian word meaning an intermediate 

storey in a building. A 

flexible financing instrument 

between equity and borrowed 

funds in balance-sheet terms. It 

is especially suitable for smaller 

businesses seeking to strengthen 

their capital base but not wishing 

to alter their ownership structure. 

Netting 

The setting-off of items (amounts 

or risks) which appear on different 

sides of a balance. 

Online banking 

A whole series of banking services 

handled with IT support 

and offered to customers electronically 

(by telephone line). 

Options 

Options are agreements giving 

the one party the unilateral right 

to buy or sell a previously determined 

amount of goods or securities 

at a price established in 

advance within a defined period 

of time. 

OTC 

Abbreviation for ”over the 

counter”, which is used to refer 

to the off-the-floor trading of 

financial instruments.

Positive/negative fair value 

The positive/negative fair value 

of a derivative financial instrument 

is the change in fair value 

between the conclusion of the 

transaction and the date of measurement, 

which has arisen due 

to favourable or unfavourable 

overall conditions. 

Profit-sharing certificate 

Securitization of profit and losssharing 

rights which are issued by 

companies of various legal forms 

and are introduced to official 

(stock-exchange) trading. Under 

certain conditions, profit-sharing 

certificates may be counted as 

part of banks’ liable funds. 

Rating 

Standardized assessment of the 

creditworthiness of companies, 

countries or of debt instruments 

issued by them, on the basis of 

standardized qualitative and 

quantitative criteria. The rating 

process forms the basis for 

determining the probability of 

default, which in turn is used in 

calculating the capital needed 

to back the credit risk. Ratings 

may be worked out by the Bank 

itself (internal ratings) or by specialized 

rating agencies such 

as Standard&Poor’s, Fitch and 

Moody’s (external ratings). 

Repo transactions 

Abbreviation for repurchase 

agreements; these are combinations 

of spot purchases or sales 

of securities and the simultaneous 

forward sale or repurchase of 

these securities in an agreement 

involving the same counterparty. 

Return on equity 

This is calculated by the ratio 

between the pre- and after-tax 

profit and the average amount of 

equity as shown in the balance 

sheet; it indicates the return 

which the company achieves on 

the capital which it employs. 

Revaluation reserve 

In the revaluation reserve, 

changes in the fair value of securities 

and equity investments 

appear, with no effect on the 

income statement. 

Securitization 

In a securitization, claims (e.g. 

loans, trade bills or leasing 

claims) are pooled and transferred 

to a special-purpose entity or 

vehicle (SPV). The SPV raises 

funds by issuing securities (e.g. 

ABS or CLNs), placed with potential 

investors. Repayment and the 

interest payments on the securities 

are directly linked to the performance 

of the underlying claims 

rather than to that of the issuer. 

Shareholder value 

Shareholder value gives priority 

to the interests of proprietors or, 

in the case of listed companies, 

shareholders. 

Under this approach, the company’s 

management is committed 

to increasing the value of the 

company over the long term 

and thus to lifting its share price. 

This contrasts with a ”stakeholder 

policy”, which aims to achieve a 

balance between the interests of 

shareholders and other groups 

involved, such as customers, 

employees, providers of outside 

funds, banks, etc. 

GLOSSARY 209 

One major component of the 

shareholder value principle is also 

a shareholder-oriented, transparent 

information policy, which 

above all at major listed companies 

is entrusted to investor relations. 

Spread 

The difference between prices or 

interest rates, e.g. the differential 

between the buying and the selling 

price of securities, or the premium 

paid on a market interest 

rate in the case of weaker creditworthiness. 

Standard risk costs 

These represent the average 

expected calculatory risk costs in 

a given year (expected loss) or 

the valuation allowances due to 

the default of customers or counterparties. 

Stop-loss limit 

This type of limit serves to restrict 

or prevent losses, such that if the 

fair value falls below a previously 

determined level, the trading 

position in question has to be 

closed or the asset sold. 

Stoxx 

The Stoxx ”family” of indices is a 

system of European benchmark, 

blue chip and sectoral indices. 

Stoxx Limited itself is a joint venture 

between Deutsche Börse AG, 

Dow Jones & Company, SBF- 

Bourse de France and the Swiss 

Stock Exchange.

210 GLOSSARY 

Stress testing 

Stress tests are used in an 

attempt to model the losses produced 

by extreme market fluctuations, 

as these cannot as a rule be 

adequately presented by VaR 

models. Generally, VaR risk ratios 

are based on ”normal” market 

fluctuations, rather than on very 

rare extreme situations which 

cannot, as a result, be represented 

statistically – such as the 

1987 stock-market crash or the 

Asian crisis. Stress tests therefore 

represent a rational complement 

to VaR analyses, and also one that 

is required by regulators. 

Subsidiary 

Company controlled by its parent 

and fully consolidated. If it is of 

minor significance, it is not included 

in the consolidation. In 

this case, the company appears 

at amortized cost. 

Sustainability 

Sustainability describes business 

management on a long-term basis 

which is compatible with acceptable 

living conditions now and in 

the future. Its guiding objectives 

are responsibility for the environment 

and balanced social relations. 

Swaps 

Financial instruments in which the 

swapping of payment flows (interest 

and/or currency amounts) 

is agreed over a fixed period. 

Through interest-rate swaps, 

interest-payment flows are exchanged 

(e.g. fixed for floating 

rate). Currency swaps offer the 

additional opportunity to eliminate 

the exchange-rate risk by 

swapping amounts of capital. 

Value-at-risk model (VaR) 

VaR refers to a method of quantifying 

risk. At present, it is primarily 

used in connection with market 

risk. VaR is only informative if 

the holding period (e.g. 1 day) 

and the confidence level (e.g. 

97.5%) are specified. The VaR figure 

then indicates the loss ceiling 

which will not be exceeded within 

the holding period with a probability 

corresponding to the confidence 

level. 

Volatility 

The term volatility is used to characterize 

the price fluctuation of a 

security or currency. Frequently, 

this is calculated from the price 

history or implicitly from a pricefixing 

formula in the form of the 

standard deviation. The greater 

the volatility, the riskier it is to 

hold the investment.

index 

Accounting 17, 54, 62, 90f., 94, 96f., 97f., 

99f., 105f., 115, 172, 175 

Accounting and measurement 

methods 90-103 

Advisory mandates 25, 35 

Annual general meeting (AGM) 15, 

17, 23, 49, 86, 142f., 162, 175f. 

Asset Management 7, 10, 20, 24-27, 

71, 76, 103, 108, 114-121, 174 

Asset-backed securities (ABS) 

25, 35, 61 

Balance sheet 7f., 85, 90, 94f., 97-102, 

105f., 123-144, 149, 153f., 156-159, 172 

Bancassurance 21 

Basel II 30, 59-64, 69, 75ff., 79 

Basic earnings per share 84, 113 

Board of Managing Directors 14-17, 

40, 53, 55-59, 65, 73ff., 78, 102, 143, 161ff., 

166, 171, 172-176, 180-181 

Bonuses 15, 136, 161 

Branch business 21f. 

Capital ratios 8, 157f. 

Capital reserve 7, 9, 84-86, 140f. 

Cash flow hedges 96f., 97, 100, 105f., 

141, 153 

Cash flow statement 88ff., 172 

Commerzbank share 46ff., 102f., 162 

Company pension 40, 109 

Competition/competitors 31f., 46, 

66, 78 

Consolidated companies 83f., 93f. 

Cooperation 21f., 25, 32 

Corporate Banking 30-33, 37, 64, 114f., 

174 

Corporate customers 10, 30-36, 49, 58, 

62, 114f. 

Corporate finance 32 

Corporate governance 14-17, 162, 

165, 175 

Cost-cutting offensive 9, 40, 109, 111, 

136, 174 

Cost/income ratio 10f., 48, 113, 115 

Credit derivatives 61, 68, 145, 160 

Creditworthiness 53, 61-66, 125 

Deferred taxes 95, 97, 99, 101, 106, 112, 

131, 141 

Deposit insurance fund 163 

Depreciation 9, 66, 99f., 106, 109f., 115 

Derivatives 35, 96ff., 100, 144f., 148f. 

Distribution see Sales 

Dividend 9, 16, 23, 46, 84, 89, 102, 140 

Economic capital 53ff., 57ff., 59, 63f., 

68, 78f. 

Employees/staff 9, 14f., 20, 40-43, 48, 

101, 103f., 135f., 176 

Employee shares 48, 143 

Equity/capital 7f., 11, 32, 46, 48f., 54, 

57, 65, 77, 86f., 90, 94f., 97, 99f., 101f., 

104f., 106, 115, 139ff., 159 

Equity investments 7, 36f., 49, 75, 

89, 93ff., 98f., 104f., 109, 111, 115, 124, 

128ff., 174 

Executives/managers 15, 41f., 103 

External trade 33 

Financial calendar 49 

Financial Institutions 33 

Foreign-exchange business 34f. 

Funds 10, 21, 24ff., 31, 35ff., 94, 155, 163 

Goodwill, amortization of 7, 9, 46, 99, 

105, 111, 115, 129 

Holdings in affiliated and other 

companies 167-171 

Income statement 8f., 12f., 83f., 90, 

95-103, 107-122, 172 

Information technology 25f. 

Internal auditing 59, 174 

Internet 14f., 17, 31, 48, 162, 165 

Investment Banking 30, 35, 37, 49, 64, 

67, 77, 114 

Investment and securities portfolio 

7, 9, 89, 93ff., 98f., 105f., 109, 111, 128, 141 

Investor relations 48 

Investors 47f., 69 

Leasing 36, 99f., 163 

Lending/credit business 7, 10, 20, 30, 

57f., 60-63, 66ff., 98, 150, 174 

Letter of comfort 164f. 

Liquidity 32, 54, 57, 73, 75f., 89, 97f., 99, 

105, 115, 159 

Maturities, by remaining lifetime 152 

Mergers & acquisitions (M&A) 35, 

115 

Mittelstand 30-33, 49, 64 

Mortgage banks 11, 65, 71, 74, 76, 

114-121, 123 

Multinational corporates 30, 32, 34, 

49, 64, 114f. 

Net commission income 9ff., 23, 48, 

78, 102, 108 

Net interest income 8, 10, 23, 48, 95f., 

98ff., 102, 107, 115, 156 

Net loss 7, 9, 84, 113, 141 

Notes 90-171 

Online banking 22 

Online investment 23 

Operating expenses 9ff., 23, 40, 100, 

103f., 109f., 115 

Other operating expenses 9, 109f., 

115 

Participations see Equity investments 

Payments 8, 23, 31, 33, 63 

Pension commitments 101, 105, 135f., 

162 

Personnel expenses 9, 40, 109, 111, 

115 

Principles of consolidation 94f. 

Private Banking 24, 26, 114f. 

Profit-sharing certificates 

outstanding 139, 157 

Property/real estate 21, 36f., 109f., 

114f. 

Property/real-estate funds 10, 37 

Provision for risks/provisioning 8, 

10, 23, 30, 48, 58, 66f. 

Provisions 9, 66, 100-103, 106, 110, 

135ff., 162 

Rating 21, 31, 59, 61ff., 65ff., 68ff., 98, 

104, 111 

Reserves 105f., 141, 153, 157 

Restructuring expenses 9, 101, 111, 

115, 136 

Retail banking 10, 20-23, 27, 49, 

114-121, 174 

Retained earnings 86, 105, 141 

Return on equity 10f., 34, 48, 64, 115 

Revaluation reserve 8, 95, 99, 104, 

105, 141 

Risk control 56-58, 60f., 69, 74f., 77, 79 

Risk management 8, 14, 32, 53, 56-59, 

61, 66, 68, 70, 76, 78f., 174 

Risk-weighted assets 7f., 107, 115, 

145, 157f., 160 

Sales 10, 20ff., 24, 26, 32, 34, 37, 43, 58, 

63f., 68 

Seats on other boards 201-205 

Securities 11, 34-36, 74, 114-121 

Segment reporting 10f., 20, 90, 114-122 

Shareholders 15f., 17, 46ff., 53, 106, 

143, 165 

Shareholdings see Equity investments 

Smaller businesses (SMEs) 

see Mittelstand 

Standard risk costs 64f. 

Strategy 7, 16, 22f., 34, 35, 46f., 48f., 173 

Subordinated capital 89, 102, 138 

Subsidiaries 9, 15, 23, 25f., 34, 36, 59ff., 

65, 67, 71, 78, 69, 93ff., 97, 99f., 103, 109, 

124, 128, 130, 164 

Suggestions scheme 42 

Supervisory Board 14-17, 56, 59, 78, 

143, 161ff., 166, 173-178 

System of limits 65, 74 

Taxes 9, 101, 110, 112, 115, 137 

Trading activities/transactions 34f., 

59, 65, 68, 70, 75, 96, 108, 115, 127, 148 

Trading profit 8, 11, 95f., 99, 106, 108 

Treasury 11, 57, 75, 114-121 

Valuation allowances 30, 66f., 98, 

125f. 

Value-at-risk 63, 71-74, 148f. 

Write-downs 7, 125 

211

212 

commerzbank group 

business progress 1968–2003* 

Business Total Customers’ Taxes Allocation Equity Total Staff Offices 

volume lending deposits paid to reserves amount of 

dividend paid 

7 bn 7 bn 7 bn 7 m 7 m 7 m 7 m 

1968 8.5 5.4 6.6 33.2 16.1 346 23.9 14,689 691 

1969 9.8 6.5 7.1 41.8 16.3 439 32.0 15,630 743 

1970 12.5 8.8 8.0 26.1 5.8 463 30.4 16,952 783 

1971 15.9 11.4 9.2 39.2 13.0 541 31.5 17,533 800 

1972 18.7 12.6 10.7 45.0 14.6 599 34.8 17,707 805 

1973 20.5 13.5 11.1 39.2 9.2 656 40.7 18,187 826 

1974 23.0 15.1 11.7 54.8 26.7 735 40.7 17,950 834 

1975 29.0 18.2 14.1 97.5 42.5 844 48.8 18,749 855 

1976 32.6 21.3 15.0 87.5 57.2 993 55.9 20,275 861 

1977 38.6 24.0 17.3 128.0 52.3 1,165 55.9 20,429 870 

1978 45.3 29.5 20.0 126.4 50.9 1,212 63.1 20,982 875 

1979 52.2 34.8 20.4 97.0 20.5 1,403 64.6 21,656 885 

1980 52.4 37.4 20.3 53.6 16.6 1,423 – 21,487 880 

1981 53.2 38.6 21.0 52.4 12.9 1,414 – 21,130 878 

1982 56.8 41.8 22.6 86.8 43.8 1,416 – 21,393 877 

1983 59.1 43.3 23.2 121.3 62.3 1,491 51.7 22,047 884 

1984 63.9 46.2 26.5 140.8 77.9 1,607 51.7 22,801 882 

1985 71.4 48.3 28.0 164.4 89.5 1,756 72.6 24,154 882 

1986 77.1 52.5 30.3 169.0 80.2 2,292 95.5 25,653 881 

1987 83.8 55.7 33.5 168.0 89.8 2,379 95.7 26,640 882 

1988 93.3 61.7 37.8 192.4 120.2 2,670 104.0 27,320 888 

1989 99.1 64.7 43.5 252.4 143.7 3,000 115.3 27,631 897 

1990 111.4 74.9 50.5 246.7 112.4 3,257 131.6 27,275 956 

1991 117.1 80.7 57.2 276.6 120.1 3,420 132.0 28,226 973 

1992 120.4 85.0 61.6 283.4 209.0 3,680 134.0 28,722 998 

1993 147.1 92.7 68.2 310.8 143.9 4,230 176.8 28,241 1,006 

1994 176.1 112.7 68.8 334.5 306.8 5,386 231.2 28,706 1,027 

1995 208.1 133.1 73.2 109.4 204.5 6,297 265.8 29,615 1,060 

1996 230.6 158.2 82.8 297.1 332.3 6,909 276.3 29,334 1,045 

1997 276.0 185.3 93.3 489.2 295.5 8,765 344.2 30,446 1,044 

1998 327.4 207.6 93.6 298.1 511.3 10,060 380.5 32,593 1,052 

1999 372.1 223.2 91.0 395.6 500.0 11,141 410.8 34,870 1,064 

2000 459.7 239.7 107.7 822.7 800.0 12,523 541.8 39,044 1,080 

2001 501.3 239.7 116.4 –114.0 –115.0 11,760 216.7 39,481 981 

2002 422.1 171.5 95.7 –103.0 –352.0 8,808 54.2 36,566 904 

2003 381.6 164.7 100.0 249.0 –2,320.0 9,091 – 32,377 884 

*) as from 1997, according to IAS

San Francisco 

Los Angeles 

Mexico City 

Chicago 

commerzbank worldwide 

Atlanta 

New York 

Grand Cayman 

Caracas 

São Paulo 

Buenos Aires 

Casablanca 

Cairo 

Beirut 

Johannesburg 

Tehran 

Bahrain 

Tashkent 

Almaty 

Mumbai 

Novosibirsk 

Singapore 

Dublin 

Beijing 

Hong Kong 

Jakarta 

London 

Madrid 

Bangkok 

Seoul 

Shanghai 

Taipei 

Labuan 

Paris 

Geneva 

Amsterdam 

Antwerp 

Brussels 

Luxembourg 

Zurich 

Milan 

Tokyo 

Foreign branches Representative offices Group companies and major foreign holdings 

Barcelona 

Copenhagen 

Rome 

Prague 

Brno 

Bratislava 

Zagreb 

Warsaw 

Budapest 

Minsk 

Moscow 

Kiev 

Bucharest 

Istanbul


Head office Investor Relations 

Kaiserplatz Telephone (+49 69) 136 -2 22 55 

Frankfurt am Main Fax (+49 69) 136-2 94 92 

Postal address: ir@commerzbank.com 

60261 Frankfurt 

Telephone (+49 69) 136-20 

Fax (+49 69) 28 53 89 

info@commerzbank.com 

www.commerzbank.com 

Our full annual report and 

also an abridged version are 

available in German and English. 

ISSN 0414-0443 

VKI02041

216 

SECTION 2 

INDIVIDUAL ACCOUNTS OF THE COMMERZBANK AG 

Pursuant to article 250 paragraph 3 of the Securities Code, the CMVM exempted Commerzbank from the 

disclosure of the individual accounts of Commerzbank AG. The account documents subject to this exemption are 

available for inspection, together with the remaining, in Commerzbanks’ registered office. 

SECTION 3 

EXTRACT FROM THE MINUTES OF COMMERZANK GENERAL MEETING OF MARCH 31 

RELEVANT POINTS OF THE AGENDA 

1. Presentation of the established Financial Statements and Management Report for the 2003 financial 

year of Commerzbank Aktiengesellschaft, together with the presentation of the approved Financial 

Statements and Management Report of the Commerzbank Group for the 2003 financial year and the 

Report of the Supervisory Board 

2. Resolution on the approval of the actions of the Board of Managing Directors 

The Board of Managing Directors and the Supervisory Board propose that the actions of the members of the 

Board of Managing Directors during the 2003 financial year be approved. 

3. Resolution on the approval of the actions of the Supervisory Board 

The Board of Managing Directors and the Supervisory Board propose that the actions of the members of the 

Supervisory Board during the 2003 financial year be approved. 

VOTING RESULTS - GENERAL MEETING OF MAY 12, 2004 

Altogether 278,169,635 shares or 46.53% of the Bank’s subscribed capital were represented at the AGM. 

TOP 2 Approval of the actions of the 


Yes votes: 269,341,167 = 99.66% 

No votes: 923,737 = 0.34% 

The proposal was approved. 

TOP 3 Approval of the actions of the 


Yes votes: 260,268,731 = 93.63% 

No votes: 17,721,566 = 6.37% 

The proposal was approved. 

Source: Commerzbank Website 

(https://www.commerzbank.com/aktionaere/haupt/2004/Voting_results_on_the_agenda.pdf)

217 

SECTION 4 

INFORMATION ON COMPANIES WITH SHAREHOLDING INTERESTS ON THE ISSUER 

Pursuant to the relevant provisions of the German Securities Trading Act (Wertpapierhandelsgesetz) the 

following holdings in voting rights have been notified to Commerzbank, as of 31 December, 2003: 

Group Assicurazioni Generali: 9.1%. 

Munich Re: 9.5%.

Commerzbank Aktiengesellschaft - CMVM

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