Commerzbank to write down $1 billion Greek debt

Germany's second-biggest lender, Commerzbank, will post writedowns of more than 700 million euros ($1 billion) on its Greek sovereign bond holdings in the second quarter, three sources told Reuters. That would make Commerzbank, which has around 3 billion euros of Greek government debt exposure, the most affected major European bank.
Commerzbank is due to report second-quarter earnings on August 10. The bank declined on Thursday to comment on the volume of the writedowns. The majority of Greek sovereign bonds held by Commerzbank have a remaining maturity of at least 15 years. Most of those are currently in the bank book, where they can be carried at cost, as opposed to the trading book where they would be marked to current market prices. Auditors insisted on the writedowns after the euro zone's bailout of Greece. French banks, which also have high exposure to Greek sovereign debt, have only written down those bonds maturing by 2020, but this limited maturity approach is a contentious matter among some auditors.
For that reason, according to the sources, Commerzbank has written down across the board its Greek sovereign debt exposure in order not to endanger its profit target for 2012. Last week, Germany's biggest lender, Deutsche, posted second-quarter results that showed it took a 155 million-euro impairment on Greek government bonds in the quarter.