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FRANKFURT, July 22 (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)
