FRANKFURT (Reuters) – Commerzbank is abandoning a project to outsource securities settlement to HSBC and as a result will write off 200 million euros ($236.2 million) in the second quarter, the German lender said on Thursday.
The bank said that it was immediately halting the outsourcing plan, launched in 2017, after identifying risks to its technical implementation, without elaborating.
The associated costs come at a bad time for Commerzbank, Germany’s No. 2 lender, which is trying to turn over a new leaf under its new chief executive, Manfred Knof. It is shedding thousands of staff to get back on a path to profit.
Joerg Hessenmueller, the bank‘s chief operating officer who is also responsible for technology, said in a statement that growth in trading volume would allow Commerzbank to conduct securities settlement profitably.
Commerzbank is assessing what went wrong and who should bear responsibility, a person with knowledge of the matter said.
“We aren’t in favour of punishing Hessenmueller for this,” said Stefan Wittmann, a supervisory board member who represents labour.
A bank spokesperson declined to make Hessenmueller available for comment.
Commerzbank said it had also separately set aside provisions “in the double-digit millions” euros as a result of the project’s abandonment.
HSBC declined to comment.
($1 = 0.8467 euros)
(Reporting by Tom Sims and Patricia Uhlig; Editing by Pravin Char)