Business model of the comdirect group

The comdirect group empowers its customers to make better financial decisions thanks to simple, customer-focused services and products in the areas of brokerage, banking and business with institutional partners.

With 1.7 million custody accounts and 20.3 million executed securities transactions (as at the end of 2014 in each case), the comdirect group is the market leader in online securities business for modern investors as well as one of the leading direct banks in Germany with 1.2 million current accounts.

Organisational structure, segments and locations

The group is managed on the basis of two business segments which operate independently of each other and pursue their own business model and associated tailored strategy.

As the parent company of the comdirect group, comdirect bank AG is directly responsible for direct business with private customers. Together with its five special funds, comdirect bank constitutes the business-to-customer business line (B2C). Its subsidiary ebase GmbH (European Bank for Financial Services) is in charge of business with institutional partners and their customers (B2B business line).

The registered office of comdirect bank AG is in Quickborn near Hamburg and the registered office of ebase GmbH is in Aschheim near Munich. On 1 August 2014, comdirect bank opened a new IT centre in Rostock. In addition, face-to-face local advice for the placement of building finance is offered at the four locations of Berlin, Frankfurt/Main, Hamburg and Munich.

Management and control

The comdirect group is managed by the Board of Managing Directors of comdirect bank AG, which currently comprises two members – Holger Hohrein and Martina Palte. Dr Thorsten Reitmayer left the company at the end of the reporting year.

Responsibilities of the members of the Board of Managing Directors (as of February 2015)
Holger Hohrein Business Development
Compliance & Money Laundering Prevention
ebase/business partners
Finance & Controlling
Information Technology
Human Resources
Legal Services & Data Protection
Internal Audit
Risk Management
Corporate Communications
Martina Palte Banking
Advisory Services
Information Security & Outsourcing Management
Investing
Customer Services
Marketing
Organisation & Consulting
Trading
Treasury
User Interface

The Supervisory Board works closely with the Board of Managing Directors and monitors and provides advice to the Board of Managing Directors on a regular basis on all material issues relating to the management of the company. Personnel changes on the Supervisory Board and its committees are outlined in the Report of the Supervisory Board. The main features of the compensation system for the Board of Managing Directors and the Supervisory Board as well as the breakdown by individual members are shown in the compensation report.

Corporate Governance statement

Management and control of the comdirect group comply with generally accepted high standards. These are summarised in the Corporate Governance statement pursuant to Section 289a of the German Commercial Code (HGB). This statement includes the Declaration of Compliance pursuant to Section 161 of the German Stock Corporation Act (AktG) as well as the Corporate Governance report in accordance with Section 3.10 of the German Corporate Governance Code. The Corporate Governance report also contains information on our compliance standards.

The Corporate Governance statement can be viewed on and downloaded from the website www.comdirect.de/ir. Previous versions of the published documents are also available on the website.

Inclusion in the Commerzbank Group

The comdirect group is quoted on the Prime Standard (Regulated Market) and with a market capitalisation of €1.17bn (as of end 2014) is listed in the SDAX. 81.27% of the shares are held by Commerz Bankenholding Nova GmbH, a wholly-owned subsidiary of Commerzbank AG. Consequently, 18.73% of the shares are in free float. Commerzbank AG provides services for comdirect bank, such as the processing of securities trading transactions as well as some payment transactions and part of the processes in risk management. In addition, the Treasury department of comdirect bank works closely with Commerzbank and generates interest income mainly from money market and capital market transactions with Commerzbank AG or its affiliated companies.

A detailed overview of the business relations can be found in the group notes (note 25).

B2C business line

Products, services and business processes

In the B2C business line, we empower our customers to make better financial decisions thanks to simple, customerfocused products and services. By expanding the mobile offering, they can access the bank’s full product range wherever and whenever they like – be this for financial and securities investments, payment transactions or loans. Online business was increasingly transacted via mobile devices. There is also a website available for access on a PC or laptop. comdirect Customer Services has staff on hand round the clock for contact with customers by videotelephony, chat, email, telephone, fax or letter.

In brokerage, we facilitate speedy, secure and cost-effective stock exchange and OTC securities trading. We also provide a continually expanded and optimised selection of products for medium and long-term investing, including an extensive range of savings plans. Launched in the reporting year, the “Bessere Geldanlage” (“Better financial investment”) offering makes it easy for investors to build a portfolio that matches their own personal security profile. In brokerage, comdirect generates commission income from securities trading and associated services as well as from front-end loads and sales follow-up commission in its funds business. In addition, there is interest income, including from loans against securities and deposits to settlement accounts.

In banking, comdirect offers products for daily money transactions and investing. The customers can manage their finances using innovative features and mobile apps. comdirect generates interest income by reinvesting customer deposits in the money and capital markets and to a small extent from interest on credit lines and overdrafts. There is also commission income in conjunction with payment transaction cards issued and from placing consumer loans.

The advice fields comprise Baufinanzierung PLUS and Anlageberatung PLUS as well as the provisioning products offered together with the cooperation partner CosmosDirekt. Customers are predominantly advised by telephone, via co-browsing or by videotelephony. Face-to-face local advice on building finance is additionally available at four office locations. In its advisory services, comdirect earns commission income from placing building finance and provisioning products as well as from paid investment advice.

comdirect bank’s product range
Custody accounts & Securities
Custody account offering
Trading platforms
Trading services
Comprehensive range of funds, ETFs and money savings plan
Account & Financial Investment
Current account
Investment accounts
“Bessere Geldanlage” (“Better financial investments”)
Anlageberatung PLUS
Money savings plan
Provisioning & Financing Consumer loans
Loans against securities
Baufinanzierung PLUS
Provisioning

Market, competitive position and key influencing factors

comdirect bank is in competition with other direct banks and online brokers as well as traditional retail banks. Providers with innovative financial services (“fintechs”) are also increasingly pushing onto the market.

In terms of the number of custody accounts and executed orders, comdirect bank is the market leader in online securities business for modern investors in Germany. Furthermore, in terms of the number of current accounts and deposit volume, it is one of Germany’s leading direct banks.

The development of the money and capital market environment has a material influence on the business line’s performance and earnings situation. The level of commission income in trading is affected by trading activity on the stock markets as well as in OTC trading and CFD trading, which in turn is heavily dependent on price development and volatility levels on the stock markets. In the investing field, the main influencing factors are the demand amongst investors for actively managed investment funds and index funds (exchange traded funds, or ETFs) as well as price effects. These determine fund volumes and consequently the level of commission on portfolio holdings. For investment advice and our provisioning products, the general trends in asset accumulation for private households are of particular importance.

The interest margin in the deposit business is primarily affected by the movements in interest rates in the money market and capital market, spreads and ratings in the bond markets as well as the money market environment. The extent to which an adverse development can be cushioned by adjusting deposit interest rates, or a favourable development can be passed onto customers, also depends on the terms and conditions offered by our competitors. Our building finance activities are impacted by conditions in the real estate markets, the trend in mortgage rates and the building finance terms and conditions of our financing partners.

The acceptance of direct banking models among German banking customers depends on technical criteria such as broadband penetration and online security in particular, as well as the prevalence of mobile technologies.

B2B business line (ebase)

Products, services and business processes

ebase supports the business models of its cooperation partners with tailored and B2B-type banking and brokerage products and services. As a B2B direct bank, ebase acts as custodian for investment funds and offers a broad range of securities supplemented by a standardised asset management set-up and account solutions.

Custody accounts, deposit accounts and lending products are available in partner-specific configurations and, on request, as white label variants in the branding of the respective B2B partner.

ebase offers specific product solutions and supplementary services tailored to the various different segments in which its B2B partners operate.

ebase’s partner segments
Insurance companies
Banks
Investment management companies
Asset managers, independent financial advisors (IFA)
Corporates (non-financials)
Banking platforms
Fintechs (in the area of asset management)

Cooperation partners and end customers receive comprehensive services that they can use independently via the ebase homepage and the online portal. This includes commission processing and professional data management, as well as support for the partners in marketing, sales and reporting.

The earnings model of ebase primarily centres on commission from securities business, which is supplemented by custody account management fees and interest income. There is also fee income from asset management.

ebase’s product range
Investment custody account ebase custody account
ETFs
Savings and drawdown plans
VL custody account
Custody account Equities, bonds, certificates, warrants
Investment accounts Daily money account
Fixed-term account
Loans Overdrafts
Loans against securities
Asset management Standardised fund asset management

Market, competitive position and key influencing factors

ebase is in competition with other fund platforms and direct banks with B2B activities. In terms of custody assets placed by third parties, ebase has a leading position in Germany among B2B platforms. It is also the partner of first choice in the insurance company and independent financial advisor customer segment. Over 200 cooperation partners and their intermediaries and sales organisations use ebase as the partner for maintaining customers’ accounts and custody accounts.

As well as trends in the segments of the individual partners, which are determined not least by regulatory issues, demand from investors for investment funds and ETFs and price development are also key influencing factors in the B2B business line.