Commerzbank AG

Against the backdrop of the financial markets and economic crisis as well as the integration of Dresdner Bank, Commerzbank is introducing a new strategic, operational and personnel structure. With its new strategic three-way-programme "Roadmap 2012", Commerzbank wants to reinforce its position as market leader in the German private and corporate customer banking business. The focus is on a profitable customer bank, along with the optimization of the asset-based credit business of commercial real estate and public finance activities and, in addition, the active management and reduction of portfolios not fitting the bank's core business.

"The Private Customer and Mittelstandsbank segments, client-focused Corporates & Markets activities as well as Central and Eastern Europe will be at the heart of the new Commerzbank. We want to fully exploit our earnings potential and to continue gaining market share," said Martin Blessing, Chairman of the Board of Managing Directors of Commerzbank. "Roadmap 2012 is our response to the challenges of the financial markets and the economic crisis and follows the logic of the Dresdner Bank takeover: we are focusing on our strengths as the house bank for private and corporate customers in Germany and adapting our business model accordingly. We want to return to profitability no later than 2011. Starting in 2012, we want to achieve an operating profit of more than EUR 4 billion p.a. and a return on equity after tax of around 12%. This is appropriate for our business model and our risk profile. By 2012 the risk-weighted assets of the bank will be reduced to EUR 290 billion."

Having successfully concluded talks with the European Commission, the bank can now increase its core capital (Tier 1) by EUR 10 billion. Taking all SoFFin funds into account, the core capital ratio (Tier 1) stands at pro forma 10.2% as of March 31, 2009. This strengthening of equity capital is tied to certain conditions. By 2014 the bank will be required to divest Eurohypo and some of its smaller holdings. Further, Commerzbank's balance sheet total (incl. Dresdner Bank) shall be reduced by the end of 2012 from some EUR 1,100 billion (as at December 31, 2008) to EUR 900 billion. Taking the proposed divestment of Eurohypo into account, the balance sheet total will be reduced to EUR 600 billion. Acquisitions will in principle not be possible for three years.

Personnel changes on the board of managemen

The new orientation of the Group is also reflected in personnel changes on the board of management and a new division of responsibilities: Ulrich Sieber, head of the group area Human Resources at Commerzbank, and Jochen Klösges, head of Group Development, are being appointed to the board of management as of June 1. Ulrich Sieber will be responsible for the area of Human Resources and Integration at board level; Jochen Klösges for the newly-created segment Real Estate and Public Finance. As of June 1, Chief Financial Officer Eric Strutz will also take over the new Portfolio Restructuring Unit. Achim Kassow, responsible for Private Clients, will also be responsible for the segment Central & Eastern Europe from June 1 onwards.

Furthermore, Stefan Schmittmann, to date responsible on the board for the areas Commercial Real Estate and Central & Eastern Europe, was yesterday appointed as the new Chief Risk Officer of Commerzbank. Prior to moving to Commerzbank, at the end of 2008 Stefan Schmittmann was a member of the board of Bayerische Hypo- und Vereinsbank AG and a member of the Executive Committee of UniCredit's Corporate Division. He is regarded as a proven expert in the field of risk management and controlling, with many years of experience as Chief Risk Officer.

Focus on Private Customers, Mittelstandsbank, CEE and client-focused C&M business

In the Private Customer segment, the new Commerzbank will have the largest consultant network in the German banking market, with some 1,200 branches and 10,000 employees. Its already strong market position will be further enhanced by the fast integration of Dresdner Bank and strict cost management. The segment aims for a return on equity before tax of more than 30% by 2012. Operating profit will also increase relative to the successful financial year 2008. The cost income ratio will be significantly decreased.

The Mittelstandsbank segment will focus on servicing German companies in the domestic as well as international markets. Already today some 20% of German foreign trade is channelled through the new Commerzbank. The position of leading export financier for German industry is to be further enhanced. The bank is also aiming to become the preferred point of contact for foreign companies doing business in Germany. Purely foreign business, for example financing for foreign companies without connection to Germany, will no longer be taken on. A further growth area to be pursued is business with companies generating an annual turnover of up to approximately EUR 12.5 million. In 2012, the target operating result for Mittelstandsbank will be more than EUR 1.5 billion and thus clearly higher than the respective 2008 figure. The cost income ratio will be improved in this segment as well. Due to market conditions it should be expected that risk-weighted assets will increase slightly.

The Eastern European economy will grow more strongly than Western Europe and the US over the mid- and long-term. In its Central and Eastern Europe segment (CEE) Commerzbank will focus on its existing activities in 2009 and 2010. In 2012, CEE is set to achieve an operating profit in excess of EUR 350 million. The cost base will be further reduced. Notwithstanding difficult market conditions, risk-weighted assets are expected to remain stable. Return on equity before tax will also remain approximately on the same level as 2008.

Corporates & Markets (C&M) will concentrate on client-focused services for the core customers of Commerzbank. Other activities will be exited or discontinued. The investment banking activities of Dresdner Kleinwort will be integrated into Commerzbank's organisational structures and will be mainly based in Frankfurt and London. The operating result should significantly increase by 2012. Return on equity before tax will come in at above 20%. The cost-income ratio, too, will improve considerably while risk-weighted assets will be clearly reduced in volume.

In Commercial Real Estate, Public Finance and Shipping, risk-weighted assets will be reduced and activities refocused. In commercial real estate financing, Commerzbank will reduce its portfolio from today's EUR 80 billion approximately (as of year-end 2008) to about EUR 60 billion by the end of 2012. In Public Finance, a reduction to a maximum portfolio of EUR 100 billion is planned by 2010. Shipping finance activities will also be refocused. In all of the three areas of the asset based business, the bank will pursue new business only very selectively. Eurohypo will in future focus on core clients in 10 markets worldwide. From the end of 2011 onwards one-third of the current cost base - equalling around EUR 110 million annually - will be cut. As part of the restructuring, 390 full-time positions will be reduced by the end of 2011.

Portfolios not fitting the new bank's client-focused profile (such as ABS, MBS, CDOs, and various types of credit derivatives) totalling some EUR 38 billion will be merged into the separate Portfolio Restructuring Unit (PRU), actively managed and reduced as optimally as possible.

Measures begin to take effect and stabilize operations in the first quarter of 2009

Operating profit was at minus EUR 591 million in the first quarter of 2009, compared with an operating pro-forma profit of EUR 470 million as at March 31, 2008. Excluding one-off effects, the operating profit for the recent three month period was positive at EUR 643 million. Despite the continuing difficult market environment, the core business areas Private Customers (EUR 48 million) and Mittelstandsbank (EUR 339 million) have finished the first three months of the financial year with a profit. However, they could not compensate for the charges in Corporates & Markets (including Public Finance: minus EUR 1.2 billion) and Commercial Real Estate (minus EUR 54 million). Notwithstanding this, initial success is being seen from restructuring measures already taken especially in Corporates & Markets. Customer business in Central and Eastern Europe remains robust. Also in this segment cost management is taking effect. As loan loss provisions increased, the operating profit was down at minus EUR 58 million.

In the first quarter of 2009 consolidated surplus after minority interests was also negative (minus EUR 861 million). On a pro-forma basis it was EUR 236 million year-on-year. Also contributing to the quarterly loss were charges from the financial markets turbulence as well as restructuring costs (EUR 289 million) resulting from the Dresdner Bank integration. Due to continuing market dislocation, the revaluation reserve came in at minus EUR 2.9 billion. The balance sheet total of the new Commerzbank dropped in the first quarter of 2009 to EUR 1,012 billion. In the first quarter of 2009 consolidated surplus after minority interests was also negative (minus EUR 861 million). On a pro-forma basis it was EUR 236 million year-on-year. Also contributing to the quarterly loss were charges from the financial markets turbulence as well as restructuring costs (EUR 289 million) resulting from the Dresdner Bank integration. Due to continuing market dislocation, the revaluation reserve came in at minus EUR 2.9 billion. The balance sheet total of the new Commerzbank dropped in the first quarter of 2009 to EUR 1,012 billion.

In Q1 2009 Net interest income increased by approximately 13% to some EUR 1.7 billion, after EUR 1.5 billion year-on-year. This mainly reflects the strong customer and deposit growth in Mittelstandsbank and CEE. Due to negative economic forecasts, credit loss provisions rose from a comparatively low level by EUR 653 million to EUR 844 million year-on-year. Net commission income fell by 28% to EUR 850 million. This is most notably due to customer caution in securities transactions and M&A activities across all segments.

Trading profit in the first quarter of 2009 (minus EUR 523 million) suffered from ongoing volatile markets and further impairments on structured credit products. At EUR 386 million, net investment income also dropped relative to the first quarter of 2008 (EUR 467 million). Operating expenses were down from EUR 2.3 billion in the first quarter of 2008 to nearly EUR 2.1 billion in the first three months of the current financial year.

In the Private Customer segment net interest income was stable in the first quarter of 2009, while net commission income dropped year-on-year to EUR 502 million due to customer caution in securities transactions. Operating expenses declined by 2% to EUR 981 million compared with the first quarter of 2008. Customer growth was in line with the positive development of the previous quarters: In spite of the difficult environment the new Commerzbank gained net some 60,000 private customers from January to March 2009.

In the first quarter of 2009 the domestic loan business performed positively in Mittelstandsbank and led to an increase in its already high market share while foreign trade financing saw a decline due to a significant slowdown in export volumes. Loan loss provisions of EUR 90 million reflect conservative economic estimates but should be expected to increase further in the months to come.

In the Central and Eastern Europe segment, the number of new customers continued to grow in the first quarter of 2009, following the positive trend of last year. Net, BRE Bank acquired some 153,000 new customers, while Bank Forum gained some 19,000.

In the first quarter of the financial year Corporates & Markets saw impairments on the ABS portfolio which resulted in losses in both trading profit and net investment income. Loan loss provisions increased to EUR 327 million. Reasons are in particular increasing risks in the area of acquisition financing. Whilst the client business in total developed well, portfolios now allocated to the Portfolio Restructuring Unit burdened the segment result by approximately EUR 1.2 billion.

Due to a scaling back of new business, net commission income in Commercial Real Estate decreased by 40% in the first quarter of 2009 to EUR 69 million. Primarily activities in the US and Spain caused an increase in loan loss provisions from EUR 62 million in the first quarter of 2008 to EUR 189 million in the first quarter of 2009. Further write-downs were made to the US-RMBS portfolio by the amount of EUR 55 million. Overall, the RMBS portfolio is impaired to about 80%.

Outlook: Synergies will be realised as expected

A forecast for all of 2009 is currently not possible due to the continued market deterioration. "We have successfully launched the new Commerzbank over the last months and we have laid the foundation to emerge strengthened from the crisis," noted Eric Strutz, CFO of Commerzbank. "The synergies created by the Dresdner Bank merger will be realised as expected and beginning in 2011 our customer bank will reap above average benefits from an economic recovery."

Operating expenses will be cut to below EUR 8 billion by the end of 2010. Assuming the return of normal market conditions, the SoFFin's silent participation can start to be repaid from 2012 onwards. The Commerzbank Group's refinancing needs of EUR 20 billion for 2009 is about 60% covered after the successful issue of securities at the beginning of the year.

Blessing: "We have tackled the challenges, we have stabilized the bank and we know how to solve the problems. We have developed a viable strategy and structures capable for the future. This will enable us to further expand our market leadership in the private and corporate customer business in Germany."

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This release contains statements concerning the expected future business of Commerzbank, efficiency gains and synergies expected in connection with the transaction, expected growth prospects and other opportunities for an increase in value of the company as well as expected future net income per share, restructuring costs and other financial data. These forward-looking statements are based on management's current expectations, estimates and projections. They are subject to a number of assumptions and involve known and unknown risks, uncertainties and other factors that may cause actual results and developments to differ materially from any future results and developments expressed or implied by such forward-looking statements. Commerzbank has no obligation to periodically update or release any revisions to the forward-looking statements contained in this release to reflect events or circumstances after the date of this release.

This release does not constitute an offer to sell or a solicitation of an offer to buy shares of Commerzbank. Shares of Commerzbank may not be offered or sold in the United States of America absent registration or an exemption from registration under the U.S. Securities Act of 1933, as amended. Commerzbank does not intend to conduct a public offering of shares in the United States.