Commerzbank moves on toxic debt

Commerzbank moves on toxic debt
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Germany’s Commerzbank has said it has identified more than 50 billion euros worth of toxic debt and has plans to move that off the bank’s main books and manage it separately.

The news raising investors’ hopes for Commerzbank to deal with its problem loans and investments. Much of the debt – almost 40 billion euros in potentially worthless securities – comes from Dresdner, a bank Commerzbank bought from the insurance group Allianz. Commerzbank has just posted a 2008 net loss of 6.6 billion euros. Its board of directors is to take a 65 percent pay cut. In February Commerzbank said it does not expect to see a profit this year but that it should post one in 2010.
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