The ratings on Commerzbank AG reflect the bank's market position as the fourth-largest private banking group in Germany, its overall sound asset quality and prudent provisioning policy, and its stable and diversified funding sources. The ratings are constrained by the bank's modest profitability, which is below those of its international peers, and its still moderate capitalization. Although Commerzbank announced steps to restructure its asset management business in early 2002, it remains challenged to develop and implement a convincing strategy for its still underperforming investment banking and retail business in a difficult economic and competitive environment. Standard&Poor's also considers the success of Commerzbank's cost-cutting initiatives and prudent credit risk management crucial to achieve a turnaround in 2003. With total
