(Bloomberg) -- Commerzbank AG will write off about 1.5 billion euros ($1.8 billion) in goodwill on its books for last year and take additional provisions for bad loans to reflect persistently low interest rates and the impact of a second lockdown to fight the pandemic.
Bad loan provisions booked in 2020 will amount to at least 1.7 billion euros, including a “top-level adjustment” of 500 million euros for the fallout from the pandemic in 2021, according to a statement on Friday in Frankfurt.
Chief Executive Officer Manfred Knof, who took over this month, is preparing to unveil a radical restructuring as the lender struggles to turn a profit. The bank said last month it will set aside 610 million euros in the fourth quarter to cover restructuring costs and in November warned that the outlook for bad loans could worsen depending on how the second wave of the pandemic develops, breaking from peers who have taken a more optimistic view.
“After this balance sheet clean-up, we are well prepared for the road ahead of us,” Knof said in the statement. “Our goal is to make the bank more profitable in the long term.”
Knof, a former Deutsche Bank executive, is currently finalizing the new strategy before the bank is expected to announce details in the first quarter.
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