Commerzbank AG, Germany's second- largest bank, dropped in Frankfurt trading after Chief Executive Officer Klaus-Peter Mueller warned of larger-than-expected losses related to U.S. subprime investments.
The shares fell as much as 1.54 euros, or 5.1 percent, to 28.60 euros, the biggest drop since Sept. 7. They closed 2.9 percent lower at 29.26 euros, valuing the Frankfurt-based bank at about 19.2 billion euros ($27.2 billion).
Mueller told the Financial Times Deutschland that the original 80 million euros in provisions set aside for writedowns on 1.2 billion euros of subprime-linked investments ``won't be enough,'' spokesman Peter Pietsch confirmed today. Analysts forecast subprime-related losses of 100 million euros to 450 million euros, according to M.M. Warburg's Andreas Plaesier.
Those are some large and heavy losses to be reporting. If it's any comfort, at least they aren't alone.....
This statement should really warm investors' hearts:
Commerzbank's chief executive said Sept. 20 that it is impossible to say if the provisions are sufficient because of difficulties assessing the value of subprime-related investments. Deutsche Bank AG, Germany's biggest bank, and Swiss rival UBS AG this month wrote down the value of securities because of surging defaults of home loans to U.S. buyers with patchy credit histories.
