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The story
1870–1918
Commerz- und Diskonto-Bank was founded on 26 February 1870 by Theodor Wille, a merchant successful in South American trade, along with other trading houses and private bankers in Hamburg. The goal was to provide financial resources to Hamburg's trade and facilitate international commerce. The banking houses of Mendelssohn & Co., M. M. Warburg & Co., Hesse Newman, and B.H. Goldschmidt were among the founding investors. In 1873 the bank sponsored the creation of an affiliate in London, the London and Hanseatic Bank, of which it subscribed about half of the shares.
In 1881, Commerz- und Diskonto-Bank was among the founders of Nationalbank für Deutschland in Berlin, along with Anglo-Austrian Bank, Vienna's newly established Länderbank, the latter's affiliate Ungarische Landesbank, and Breslauer Disconto-Bank Friedenthal & Co. By 1891, it had become the largest bank in Hamburg by total lending. It participated in the rapid industrial and commercial development of the German Empire by providing trade finance, credit to small businesses, and investments in various industries that included shipping, electricity generation, mining, chemistry, and manufacturing. In 1897 it acquired Jacques Dreyfus & Co., a bank established 1868 as Dreyfus-Jeidels in Frankfurt, which also had a branch in Berlin. The bank shortened its name to Commerz- und Disconto-Bank in 1898.
In 1901 the bank joined the Reichsanleihe-Konsortium, a group of several dozen banks that placed loans for the German imperial government. In 1905 it acquired Berliner Bank (est. 1889 following the liquidation of the cooperative Berliner Handelsbank e.G., est. 1878) and from then until 1931 maintained two head offices: in Hamburg and Berlin, the latter at Behrensstrasse 46 / Charlottenstrasse 47. It acquired a number of regional and private banks, including B. Magnus (est. 1826 in Hanover) in 1897 and Altonaer Bank (Altona) in 1910.
During World War I, the London and Hanseatic Bank, the subsidiary established in 1873, was seized by the British authorities. Other German-owned banks were also seized. In 1917, Commerz began making acquisitions in Germany. By 1923 it had acquired 40 local banks.
1918–1933
In 1920 the bank acquired Mitteldeutsche Privat-Bank, a significant institution established 1856 in Magdeburg with a dense branch network in Saxony and Thuringia. The newly-enlarged group was renamed Commerz- und Privat-Bank AG. In 1923, it acquired 25% of Rigaer Internationale Bank in Riga, which was liquidated in 1933. In 1933, to cope with hyperinflation, it employed a total of 26,000 staff in 319 locations, the densest branch network among German banks; by the end of 1923, following the end of hyperinflation, the headcount fell to 10,200. In 1927, Commerzbank increased business in the US by establishing an office in New York City In 1928, co-founded General Mortgage and Credit Corporation, a long-term lender to small businesses, with Chase Securities Corp. and Halsey, Stuart & Co.,. In 1929 it merged with the Mitteldeutsche Creditbank (established 1856 in Meiningen, relocated to Frankfurt in 1886), another transformative acquisition.
By 1930 Commerz- und Privatbank had deposits of 1.5 billion Reichsmarks and was Germany's fourth-largest joint-stock bank by total deposits, behind Deutsche Bank & Disconto-Gesellschaft (4.8 billion), Danat-Bank (2.4 billion), and Dresdner Bank (2.3 billion) and ahead of Reichs-Kredit-Gesellschaft (619 million) and Berliner Handels-Gesellschaft (412 million).
Following the European banking crisis of 1931 the bank consolidated all head office functions in Berlin, then in February 1932 it was prompted by the Reichsbank to absorb the distressed Barmer Bankverein (established 1867 in Wuppertal, relocated to Düsseldorf in 1924). As a consequence, the government held 71 percent of the merged entity's capital, mainly through the Reichsbank subsidiary Deutsche Golddiskontbank. In November 1932 the Commerz- und Privatbank chief executive Friedrich Reinhart and chairman Franz Heinrich Witthoefft were among the signatories of the Industrielleneingabe petition of business leaders that advised President Paul von Hindenburg to appoint Adolf Hitler as chancellor.
1933–1945
In 1935, Commerz- und Privat-Bank paid its first dividend in five years, and returned to private ownership in 1936–1937. In line with the Nazi policy of aryanization, the bank dismissed its Jewish staff, which by 1933 represented around 14 percent of its senior executives and 1.6 percent of employees overall. Supervisory board members Curt Sobernheim and Albert Katzenellenbogen left in 1933 and 1937 respectively, as did management board member Ludwig Berliner in 1933. All three would be murdered in the early 1940s under the Final Solution policy. Commerzbank had no Jewish employees by 1938. By September 1939 it had 6,900 employees, of which 16 percent were conscripted into the Wehrmacht. In 1940, the bank formally adopted the name Commerzbank AG, the name by which it had generally been referred to for a long time.
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Through the 1938 Anschluss, the annexation of the Sudetenland, and during World War II, the bank opened branches and subsidiaries in the expanded German-controlled territory and also benefited from the expropriation or sale under duress of Jewish-owned banks. (Conversely, it closed its office in New York in 1939.) In 1940 it opened a branch in Strasbourg. In 1941 it took over the former Hugo Kaufmann & Co.'s Bank in Amsterdam and in 1942 renamed it the Rijnsche Handelsbank. In November 1941 it established Hansabank AG in Riga, with operations in Reval (December 1941) and Dorpat (December 1942), and in 1942, Hansabank NV / Banque Hanséatique SA in Brussels. In the former Yugoslavia, it took minority stakes of 6 and 10 percent respectively in Bankverein AG Belgrad and Bankverein für Kroatien AG in 1941, both carved out from the former Allgemeiner Jugoslawischer Bankverein which itself had been a product of dismantling Wiener Bankverein in the 1920s. In 1942 it also took a 10 percent stake in Böhmische Industriebank in Prague, and 10 percent in the newly established Deutsche Bank für Ostasien intended to develop trade with Imperial Japan. By late 1944, the bank's balance sheet size had tripled from its 1938 level, with two-thirds of the assets being German government debt. In comparative terms, however, it had been less expansionist and ideologically aligned than other large German banks, particularly Deutsche Bank and Dresdner Bank, and in 1942 fell from third to fourth place among German joint-stock banks. In early 1945, it relocated its head office from Berlin to Hamburg as a precautionary measure.
1945–1967
By the end of the war the former head office and close to half of the bank's branches were in the Soviet occupation zone, where they were promptly nationalized and liquidated. Of the 119 locations in West Germany, 42 were fully destroyed, 35 severely damaged, and 42 in working condition. In 1947–1948, these were first reorganized into nine groups of branches, intended to be operationally independent: Bankverein Westdeutschland (Düsseldorf), Hansa-Bank (Hamburg), Merkur-Bank (Hanover), and Holsten-Bank (Kiel) in the British occupation zone; Mittelrheinische Bank (Mainz) in the French zone; and Mitteldeutsche Creditbank (Frankfurt), Bankverein für Württemberg-Baden (Stuttgart), Bayerische Disconto-Bank (Nuremberg), and Bremer Handels-Bank (Bremen) in the American zone. In August 1949, the bank resterted operations in West Berlin, first as Bankhaus Holbeck, renamed Bankgesellschaft Berlin AG in October, and later Berliner Commerzbank AG. In order to expand credit provision to the German economy, the nine West German entities were consolidated by law in September 1952 into three: Bankverein Westdeutschland AG, renamed Commerzbank-Bankverein AG in 1956, in Düsseldorf; Commerz- und Disconto-Bank AG in Hamburg; and Commerz- und Credit-Bank AG in Frankfurt. On 1 July 1958, the Düsseldorf entity acquired the other two and changed its name back to Commerzbank AG. Berliner Commerzbank AG only merged into the parent Commerzbank on 1 October 1992.
In 1951 several of the groups of Commerzbank branches had taken stakes in ADIG Allgemeine Deutsche Investment-Gesellschaft, Germany's first investment fund management company founded in 1949 in Munich, thus establishing the basis for the group's asset management arm. By 1962, Commerzbank had surpassed its pre-war level with 372 branches. Meanwhile, the Commerzbank group restarted an international activity by opening a representative office in Rio de Janeiro in 1952, followed by Amsterdam and Madrid in 1953, Beirut in 1957, and Tokyo in 1961, the first German bank to open in postwar Japan. in 1967, Commerzbank established a representative office in New York City. That same year, it joined with Irving Trust, First National Bank of Chicago, Westminster Bank, and HSBC to form the International Commercial Bank in London. In 1969 Commerzbank opened a subsidiary in Luxembourg, Commerzbank International SA (CISAL), which for many years was its largest foreign subsidiary. In 1971 the New York office was converted into a branch, the first by a German bank in the postwar United States. Commerzbank opened further branches in London in 1973, in Paris in 1976, and in Hong Kong in 1979. It opened a representation in Beijing on 16 April 1982.
1970–1990
Commerzbank and Crédit Lyonnais entered a strategic partnership, the "Europartners Group", on 14 October 1970, in order to achieve cross-border synergies despite public policies which at the time prevented outright cross-border mergers. They immediately formed a 50–50 joint venture for U.S. securities business, Europartners Securities Corporation, which absorbed Crédit Lyonnais's New York investment banking operation. The Europartners alliance was joined on 11 January 1971 by Banco di Roma, adopted a common logo (the "quatre vents") in 1972, and expanded to Madrid-based Banco Hispano Americano (BHA) in October 1973. In 1974 Commerzbank and Crédit Lyonnais merged their operations in Saarland into a joint venture majority owned by Commerzbank and called Commerz-Credit-Bank AG Europartner, with seat in Saarbrücken and small minority stakes by the other two Europartner banks. In 1984 Commerzbank acquired a 10 percent stake in BHA, and BHA in turn took a 5 percent stake in Commerzbank in 1989. In 1988 Commerzbank acquired full ownership of Europartners Securities Corporation in New York from Crédit Lyonnais, and subsequently renamed it Commerzbank Capital Markets Corporation. The Europartners alliance was eventually brought to an end in 1992.
In 1968, the Eurocheque system was introduced. Customers could now withdraw cash in 30 European countries using a cheque card. The Eurocheque card with a magnetic strip for ATMs was introduced in 1981. In 1970, Commerzbank founded the non-profit Commerzbank Foundation. As an independent foundation of civil law, it aims to promote and support the social commitment of Commerzbank. The focus areas are science, culture, and social welfare. The Commerzbank Foundation supports disadvantaged people, such as in their professional integration, and promotes contemporary art. In the early 1980s, Commerzbank faced a crisis due to mistakes in assessing interest rate developments. The good economic conditions later favored the restructuring under the leadership of Walter Seipp.
1990–1998
In 1990, Commerzbank moved its registered office from Düsseldorf to Frankfurt am Main. The German reunification allowed Commerzbank to tap into new target groups; in the first three months after the Monetary, Economic and Social Union of Germany, around 80,000 customers and thousands of corporate clients chose the bank. Klaus-Peter Müller, appointed to the board in 1990, led the department responsible for preparing business in the new federal states.
The bank's engagement in the East developed into a crucial advantage. Alongside expansion in the domestic market, Commerzbank continued its internationalization, such as by opening an office in Bangkok. Later, Commerzbank became the first international financial institution to open a branch in South Africa. Commerzbank established its management consultancy to meet the demand for professional support.
In the early 1990s, Commerzbank significantly increased its earnings. However, the stock price remained comparatively low, leading to cost reductions and job cuts. This further improved the profit situation. Commerzbank then promised its shareholders a higher dividend. In 1991, a cross-border collaboration with the French Crédit Lyonnais was announced, seen as a signal for consolidation in the European financial industry. Two years later, a tri-national cooperation was established between the German Commerzbank, the British National Westminster Bank, and the French Société Générale.
In 1994, Commerzbank founded Comdirect Bank, becoming the first major German bank to enter the emerging direct banking market. 1999, Commerzbank also sold computers to facilitate customers' access to online banking. The branch network was also upgraded with digital technologies. At that time, the bank earned around two-thirds of its income abroad, for example, through its new representation in Taipei and expansions in Hungary and the Czech Republic. However, CEO Martin Kohlhaussen still demanded more performance, especially from the sales of domestic branches. Commerzbank aimed to significantly increase its return on equity in the second half of the 1990s to remain competitive internationally. Due to its comparatively low balance sheet total internationally, Commerzbank was seen as a takeover candidate in the 1990s. The board pursued an independent continuation of the business, interpreted as rejecting a merger with Deutsche Bank. Also, a potential acquisition of Postbank by Commerzbank, which was discussed at times and would have led to a financial conglomerate with a building society and insurance, ultimately did not materialize.
The bank managed to increase its customer base significantly. With fewer branches, it generated more profit. At the same time, innovative new services were created, such as cash withdrawal at gas stations and online banking for corporate customers. The public critically received the outsourcing of employees to a temporary employment agency. After acquiring stakes in numerous foreign banks and insurance companies during the 1990s, Commerzbank bought around 30 percent of the Korea Exchange Bank in 1998 to more actively participate in developing emerging Asian markets. Despite the continent's financial market problems, the bank saw opportunities for above-average growth. Alongside international expansion, Commerzbank focused on strengthening its European presence, mainly through alliances with other large banks.
2001–2009
Commerzbank suffered reversals in a disastrous foray into investment banking in the first half decade of the 2000s and eventually shut down its Commerzbank Securities investment banking unit run by Mehmet Dalman and Roman Schmidt after Chairman Klaus-Peter Müller labelled it a "problem child" and a review by consulting firm Mercer Oliver Wyman which concluded that Commerzbank Securities lacked a viable business model. What was left of Commerzbank Securities was folded into a division of the commercial bank called Corporates and Markets.
In 2001, Commerzbank restructured its domestic business. It created a bank for private customers and a separate unit for corporate and investment clients. Units were sometimes opened on Saturdays to remain competitive in the increasingly challenging private customer market. In 2004, it confirmed the acquisition of Schmidt Bank based in Hof, gaining 70 branches and 29 other locations in Bavaria, Thuringia, and Saxony, increasing its private customer base by 360,000 to 4.3 million. The transaction was seen as rejecting a merger with the Bavarian HypoVereinsbank. In addition to digital activities and growth in the domestic market, especially among corporate clients, Commerzbank explored various acquisitions in Central and Eastern Europe. With the majority takeover of Poland's BRE Bank (today's mBank) in 2003, it significantly expanded its regional engagement. Moreover, Commerzbank grew in smaller markets, such as in Romania. Revenues from Central and Eastern Europe were expected to grow significantly. Furthermore, Commerzbank relocated back-office activities, such as IT systems, to Poland and the Czech Republic.
In 2001, the three major Frankfurt banks, Deutsche Bank, Dresdner Bank, and Commerzbank, decided to establish a joint mortgage bank. Eurohypo commenced its business operations in the second half of 2002. Following the dot-com bubble's collapse and subsequent turmoil in financial markets, Commerzbank had to make significant write-downs on its stake as early as 2003. For a time, the major shareholders even waived their dividends to improve the financing of Eurohypo. Eurohypo distanced itself from Commerzbank. An initial public offering (IPO) was initially discussed to strengthen the company's independence. Despite initial challenges, Eurohypo became an important component in Commerzbank's earnings statement. Therefore, the bank stopped the IPO planned 2005 to prepare for its takeover of Eurohypo. The re-entry into public and real estate financing marked a significant change in the company's strategy. Eurohypo initially insisted on its independence.
In November 2005, Commerzbank finally announced the complete takeover of Eurohypo after agreeing on terms for acquiring shares from Deutsche Bank and Dresdner Bank. This step elevated Commerzbank to the second-largest bank in Germany. Observers described the surprising acquisition as a strategic coup, especially in competition with domestic rivals. To finance the acquisition, the bank conducted a capital increase. Even after the takeover, Eurohypo remained largely independent. The real estate business became an essential pillar of the group.
As early as the early 2000s, there were rumors about a merger of Commerzbank with another major European financial institution. After the failed merger of Deutsche Bank with Dresdner Bank, Commerzbank was considered the most likely candidate for acquiring Dresdner Bank. Such discussions started around June 2000. The possibilities discussed included the formation of a large financial conglomerate, possibly involving Allianz. Trade unions viewed the merger of Commerzbank and Dresdner Bank critically in light of potential job cuts, as did the investment company Cobra, which held stakes in both financial institutions. On the other hand, Generali, the Italian finance and insurance conglomerate and another major shareholder of Commerzbank, explicitly expressed positive views on the plans. Ultimately, the plans failed because it was impossible to bring together the different interests of all parties into a familiar concept. A critical factor was also the conflict over the valuation of Commerzbank and Dresdner Bank. Additionally, a cross-border merger was considered more sensible. Both banks emphasized their independence.
From Wikipedia’s article on Commerzbank, shared under CC BY-SA 4.0.7