Commerzbank Retains Securities Settlement In-house – Outsourcing Project Stopped

  • Banking
  • 22.07.2021 04:10 pm
 Exceptional write-off in the amount of around €200 million necessary in Q2
 Growth of securities transactions makes in-house settlement profitable

Today, Commerzbank’s Board of Managing Directors decided to end the project for outsourcing securities settlement to HSBC Transaction Services GmbH with immediate effect. The reasons for the decision are technical implementation risks and changed market conditions. Due to the project stop, the Bank is anticipating an exceptional write-off of around €200 million in the second quarter of 2021. The write-off will not impact the liquidity or the Common Equity Tier 1 (CET1) capital of the Bank. Furthermore, provisions in the double-digit millions will be set aside.
This year’s cost target of €6.5 billion remains valid in operational terms. However, the expenses for the exceptional write-off come in addition.
With this step, Commerzbank reduces complexity in its transformation and will firstly continue to modernise its own system landscape. The IT delivery organisation of Commerzbank introduced two years ago will make an important contribution to this. As part of its strategy 2024, the Bank has created a dedicated Key Area for Securities & Brokerage.
Since the launch of the outsourcing project in 2017, the market and technological environment have undergone substantial change. “After careful consideration, we have taken the decision to stop the outsourcing project owing to the high implementation risks. The significant growth in trading volume and the ongoing technological development are allowing us to continue securities settlement profitably,” commented COO Jörg Hessenmüller.
The transfer of positions to the systems of the subsidiary company of HSBC planned for the middle of 2021 will not be carried out. Master data already transferred and tax statements relating to securities business are to be transferred back to Commerzbank by the beginning of 2022. Client business will not be affected by this.

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