Commerzbank’s credibility issue

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Wolfgang Hartmann, chief risk officer at Commerzbank, faced a multitude of problems last month. Standard & Poor’s (S&P) downgraded the bank’s long-term credit rating by one notch to A–, with a negative outlook, which immediately raised Commerzbank’s cost of capital by several basis points. Rumours about huge losses in its credit derivatives portfolio fuelled investors’ concerns about the bank’s liquidity and capital. Its share price plummeted by some 15% in the immediate aftermat

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