The troubled German bank Commerzbank will today reveal a write-off worth about €2bn (£1.4bn) as it tries to overhaul its balance sheet and shore up investors' confidence that its holdings in big companies do not contain nasty surprises.
Commerzbank is expected to say the write-off is due to its decision to revalue the stakes it has in some of Germany's biggest companies under market rules, to reflect what these holdings are worth at today's depressed prices.
It is also carrying on its balance sheet a large amount of goodwill in Jupiter Asset Management. Commerzbank attempted to sell the British fund manager but eventually took the business off the market because no buyers could be found at the right price.
The bank is thought to have decided to write off the goodwill in Jupiter.
It is also expected to say it is taking a hit on Eurohypo, the specialist property bank it jointly owns with Deutsche bank and Dresdner bank. Last year the three decided to pool the majority of their real estate-related banking activities into the Eurohypo entity.
Commerzbank will stress that the write-offs have not been caused by a new problem in its accounts, but by its decision to make its holdings more transparent.
At a time when Germany's economy is still struggling, investors have become suspicious that what they term "hidden losses" may be among the substantial holdings the country's banks have in industrial and financial companies.
Germany's commercial banks have been struggling in the past few years with sluggish growth and high costs.
The country's financial sector is not nearly as profitable as that of the UK, due to laws in Germany that allow state-owned banks to borrow money at cheaper rates than their commercial counterparts.Reuse content