COMMERZBANK AKTIENGESELLSCHAFT

Transkript

1 This prospectus constitutes a base prospectus (the "Base Prospectus" or the "Prospectus") in respect of non-equity securities within the meaning of Article 22 Para.(6) No. 4 of the Commission Regulation (EC) No 809/2004 of April 29, 2004 (the "Commission Regulation"). Base Prospectus October 20, 2011 COMMERZBANK AKTIENGESELLSCHAFT Frankfurt am Main Federal Republic of Germany 5,000,000,000 Credit Linked Note Programme (the "Programme") Application has been made to the Bundesanstalt für Finanzdienstleistungsaufsicht ("BaFin") in its capacity as competent authority (the "Competent Authority") in the Federal Republic of Germany under the German Securities Prospectus Act (Wertpapierprospektgesetz) for the approval of this Base Prospectus and to the Stuttgart Stock Exchange (Baden-Württembergische Wertpapierbörse) to list credit linked bearer notes (the "Notes") to be issued under the Programme on the regulated market (regulierter Markt) of the Stuttgart Stock Exchange. Notes may also be listed on any other stock exchange ("Alternative Stock Exchange") or may be unlisted as specified in the relevant Final Terms (as defined herein). The Notes or securities, if any, to be delivered upon any redemption of the Notes have not been and will not be registered under the U.S. Securities Act of 1933 (the "Securities Act") or with any securities regulatory authority of any state or other jurisdiction of the United States, and trading in the Notes has not been approved by the U.S. Commodity Futures Trading Commission under the U.S. Commodity Exchange Act. The Notes may be subject to U.S. tax law requirements. Subject to certain exceptions, the Notes may not be offered, sold or delivered within the United States or to, or for the account or benefit of, U.S. persons (as defined in the U.S. Internal Revenue Code of 1986, as amended, and regulations thereunder and in Regulation S under the Securities Act). For more details, see "Selling Restrictions", page 277 et seq. hereof. Interests in Notes issued in the form of a Temporary Global Note will be exchangeable, in whole or in part, for interests in a Permanent Global Note on or after the date 40 days after the later of the commencement of the offering and the relevant issue date, upon certification as to non-u.s. beneficial ownership.

2 Table of Contents Page Summary... 1 Summary of Risk Factors... 1 General Description of the Programme Summary of the Programme Terms and Conditions of the Notes Summary relating to the Commerzbank Group Deutsche Übersetzung der Zusammenfassung Zusammenfassung Zusammenfassung der Risikofaktoren Allgemeine Beschreibung des Programms Zusammenfassung der Programm-Anleihebedingungen Zusammenfassung hinsichtlich der Commerzbank Aktiengesellschaft Risk Factors Risk Factors relating to the Notes Risk Factors relating to Commerzbank Aktiengesellschaft Important Notice about this Prospectus General Information Instruction for the use of the Programme Terms and Conditions of the Notes Programme Terms and Conditions of the Notes Form of Final Terms Commerzbank Aktiengesellschaft Taxation Selling Restrictions Documents Incorporated by Reference Address List...A-1 Signature Page...S-1 i

3 Summary The following constitutes a summary (the "Summary") of the essential characteristics and risks associated with COMMERZBANK Aktiengesellschaft ("Commerzbank Aktiengesellschaft", "Commerzbank", the "Bank" or the "Issuer", and together with its consolidated subsidiaries and affiliated companies "Commerzbank Group" or the "Group") and the Notes to be issued under the Programme. This Summary should be read as an introduction to this Prospectus. Any decision by an investor to invest in an issue of a Series of Notes during the lifetime of this Prospectus should be based on consideration of this Prospectus as a whole, including the documents incorporated by reference and supplements to the Prospectus and the relevant final terms within the meaning of Art. 26 No. 5 of the Commission Regulation (EC) No. 809/2004 of 29 April 2004 (the "Final Terms"). Where a claim relating to the information contained in this Prospectus, any supplement to the Prospectus and the relevant Final Terms is brought before a court, the plaintiff investor might, under the national legislation of such court, have to bear the costs of translating the Prospectus, any supplement to the Prospectus and the relevant Final Terms before the legal proceedings are initiated. Civil liability attaches to the Issuer who has tabled this Summary including any translation thereof and applied for its notification, but only if the Summary is misleading, inaccurate or inconsistent when read together with the other parts of this Prospectus. The following Summary does not purport to be complete and is taken from, and is qualified in its entirety by, the remainder of this Prospectus and, in relation to the terms and conditions of any particular Series of Notes, the applicable Final Terms. Expressions defined or used in the Programme Terms and Conditions of the Notes (the "Terms and Conditions") or elsewhere in the Prospectus shall have the same meaning in this Summary. Summary of Risk Factors The purchase of the Notes issued under the Programme is associated with certain risks summarised below. The specific risks are based on the nature of the Notes issued from time to time and may only be set out in the respective Final Terms, which must therefore always be included in the assessment of risks. An investment in the Notes requires exact knowledge of the respective transaction. Investors should have reasonable knowledge of and experience in financial and business matters and be experienced with investments in Notes linked to certain events and reference underlyings, if applicable and know the associated risks. Prospective investors of the Notes offered hereby should consider their current financial circumstances and investment objectives and always consult their own financial, legal and tax advisers with regard to the suitability of such Notes in light of their personal circumstances before acquiring such Notes. Should one or several of the following risks occur, this could lead to a material decline in the price of the Notes or, in the worst-case scenario, to a total loss of interest and of the amount invested by the investors. Risk Factors relating to the Notes Risk Factors relating to the Credit Linkage of the Notes The Notes to be issued are linked to one or more private sector entities or public sector entities, as the case may be (the "Reference Entities") and therefore subject to the occurrence of one or more Credit 1

4 Events (as defined herein) and may be also subject to Trigger Events (as defined herein) related to those Reference Entities (together "Credit Linkage Events"). A credit event occurs if during the relevant Observation Period(s) certain circumstances occur, having economically adverse effects on a Reference Entity, in particular Bankruptcy, Failure to Pay, Restructuring, Obligation Acceleration, Repudiation/Moratorium as specified in the Final Terms ("Credit Event"). In addition, the Final Terms may provide for potential failure to pay. A potential failure to pay is not a Credit Event. However, it occurs if a Failure to Pay threatens to occur because a grace period under the payment obligation which has not expired by the end of the Observation Period has to be taken into account in accordance with the Final Terms ("Potential Failure to Pay"). If in this case a Failure to Pay eventually occurs upon expiry of a grace period and/or a corresponding extension period under the Notes (resulting from the corresponding Potential Failure to Pay), such Failure to Pay, in spite of having occurred only after the end of the relevant Observation Period is deemed to be a relevant Credit Event which can be notified to the Noteholders and thus may have effects on the Notes in accordance with the Final Terms. If the Final Terms do not provide for Potential Failure to Pay, the risk that a Failure to Pay occurs is even higher since grace periods (if any) under the payment obligation are not taken into account, e.g. a Failure to Pay would occur immediately if payments of a certain threshold amount are not made as they become due. A trigger event occurs if during the relevant Observation Period (i) the Credit Default Swap Spread linked to the Reference Entity or one of the Reference Entities is greater than a certain level, (ii) the weighted average of the Credit Default Swap Spreads linked to each of the Reference Entities is equal to or greater than a certain level, or (iii) the market price of the Notes falls below a certain level, each such level being specified in the Final Terms ("Trigger Event"). The Credit Default Swap Spread is the market offer price payable for a Hypothetical Credit Default Swap with a certain maturity and nominal amount (as specified in the Final Terms) providing for the respective credit protection. Upon the occurrence of a Credit Linkage Event, the Notes may cease to bear interest or interest may be payable on a reduced basis. With respect to Notes which do not provide for capital protection (the "Derivative Notes"), such Credit Linkage Events may, in addition, lead to a redemption at maturity or an early redemption (i) at a Cash Settlement Amount (following the occurrence of (a) Credit Event(s)), a Spread Cash Settlement Amount or a Trigger Cash Settlement Amount (following the occurrence of Trigger Events), as the case may be, (together the "Cash Settlement Amount") or (ii) by delivery of a certain number of bonds, loans or any other deliverable obligations of a Reference Entity ("Deliverable Obligation") specified in the Final Terms and selected by the Issuer in its own discretion. Hence, by purchasing the Derivative Notes, prospective investors are also making an investment decision with respect to the Reference Entity or the Reference Entities, as the case may be. The determination of the Cash Settlement Amount may be based on the market value of certain Reference Obligations of the affected Reference Entity. The value of the Reference Obligation(s) or Deliverable Obligation(s) may after the occurrence of a Credit Event be significantly lower then their principal amount. Hence, repayments to be made at maturity may not be made at all or only on a reduced basis. If the Notes are linked to a portfolio of Reference Entities with respect to which the Final Terms provide for a continuous, computed cash settlement following each Credit Event that occurs with respect to the Reference Entities, the Notes will be subject to an adjustment of the (Early) Redemption Amount, which would be paid if no Credit Event occurred, taking into account the applicable Final Price for the relevant Reference Obligation. Upon occurrence of a Trigger Event, the Final Terms may provide that the calculation of the payable amount will generally be based on either (i) the current market value of the Notes or (ii) the performances of one or more Hypothetical Credit Default Swaps relating to the Reference Entities. 2

5 Therefore, if a Credit Linkage Event occurs with regard to a Derivative Note investors may only receive a fraction of the invested capital or may suffer a total loss of the capital invested and loss of interest. In addition, there is a reinvestment risk. The effects of Credit Linkage Events on the Notes may be leveraged, meaning that (i) where the Principal Amount of the Note is lower than the sum of the Weighted Amounts of all Reference Entities, Credit Linkage Events do not affect the payments under the Notes proportionally to their weighting within the portfolio but by the absolute Weighted Amount of the respective Reference Entity, or (ii) the Weighted Amount of the respective Reference Entity is multiplied by a factor. Further, Credit Linkage Events may not have direct effects on the payments under the Notes in cases where Credit Linkage Events below a certain threshold are not taken into account. In case of (early) redemption by physical delivery prospective investors must be aware that, as a result of such a physical delivery, investors and their investment no longer depend on the creditworthiness of the Issuer but on the value of the Deliverable Obligations actually delivered. The value of any such delivered obligation might be significantly less than the capital invested by the investor and may, in extreme cases, even be zero. In addition to such credit linkage, the Notes may be linked to certain underlyings, i.e. the amount payable upon redemption and/or interest payments on the Notes are linked to the performance of certain underlyings such as shares, share baskets, currencies, currency baskets, interest rates, interest rate structures, indices and index baskets (the "Reference Underlyings"). As the Notes can, in addition to credit linkage, provide for linkage to Reference Underlyings, the risk for the investors, as described above, is cumulative or exponentially increased (for further aspects of risks relating to underlying linkage, see "Additional Risks with respect to Notes with Underlying Linkage" below). The Notes do not create any legal relationship between the holders of the Notes (the "Noteholders") and the Reference Entities, and the Noteholders will not have any right of recourse against the relevant Reference Entity in the event of any loss. If during the term of the Notes, the creditworthiness of one or more Reference Entities deteriorates significantly without the occurrence of a Credit Linkage Event being imminent, this may materially adversely affect the market price of the Notes. The correlation between Reference Entities may affect the market price of the Notes linked to more than one of the Reference Entities. Depending on the structure of the Notes, a change in correlation can have a positive or negative effect on the market value of the Notes. The Final Terms may set out credit ratings of the specified Reference Entities issued by private rating institutions. In spite of its wide-spread application a rating is merely a condensed measure of assessing the ability of an issuer to meet its payment obligations. The factors influencing the way ratings are arrived at are not always transparent. The rating agencies expressly state that their ratings should be used as an assistance in preparing, but not as a substitute for, one's own analysis. As a result of mergers or other events, the Reference Entity or, in the case of more than one Reference Entity, the Reference Entities within the portfolio of Reference Entities may change and any risk which may result from such a change of Reference Entities will be borne by the Noteholders. The Issuer, the Determination Agent and their affiliates may be in possession of information in relation to any Reference Entities that may not be publicly available or not known to the Noteholders and may be subject to conflicts of interest. 3

6 General Risks relating to the value of the Notes and related investment costs and expenses The market for debt securities issued by German companies and banks is influenced by economic and market conditions in Germany and, to varying degrees, by market conditions, interest rates, currency exchange rates and inflation rates in other European and other industrialised countries. There can be no assurance that an active trading market will develop or be maintained for all Notes. If an active trading market for the Notes does not develop or is not maintained, the market or trading price of the Notes and the possibility to sell the Notes at any time may be adversely affected. When Notes are purchased or sold, several types of incidental and consequential costs (including transaction fees, commissions and deposit fees) are incurred in addition to the current price of the Notes. These incidental costs may significantly reduce or even exclude the profit potential of the Notes. In case of Physical Settlement investors may be required to bear all costs, fees, expenses and taxes associated with the delivery of the Deliverable Obligations. Noteholders should not rely on being able to enter into transactions during the term of the Notes which would enable them to exclude any risks in connection with their Notes. Payments of interest on the Notes, or profits realised by the Noteholder upon the sale or repayment of the Notes, may be subject to taxation in its home jurisdiction or in other jurisdictions in which it is required to pay taxes. Any interest paid may only be invested at the market interest rate applicable from time to time, which may not have developed as expected. If the purchase of Notes is financed through loans and there is a subsequent delay or failure in payments of the Issuer with regard to the Notes or if a Credit Linkage Event occurs or the price decreases considerably, the Noteholder does not only have to accept the loss incurred but also pay interest on and redeem the loan. This may considerably increase the risk of loss. A Noteholder should not rely on the prospect of being able to redeem the loan or pay interest on the loan out of transaction profits. The Terms and Conditions will be governed by German law. No assurance can be given as to the impact of any possible judicial decision or change in German law or administrative practice after the date of this Prospectus. Payment Risks not relating to the Credit Linkage of the Notes Due to varying interest income, Noteholders are not able to determine a definite yield of floating rate Notes at the time they purchase them. Reverse floating rate Notes are also subject to sharp price fluctuations, so that their return on investment cannot be compared with that of investments having fixed interest rates. Changes in market interest rates have a substantially stronger impact on the prices of zero coupon Notes than on the prices of ordinary Notes because the discounted issue prices are substantially below par, which is due to the discounting. A holder of a Note denominated in a foreign currency and a holder of a dual currency Note is exposed to the risk of changes in currency exchange rates which may affect the yield of such Notes. The early redemption of a Note may lead to negative deviations from the expected yield and the repaid redemption amount of the Notes may be lower than the purchase price paid by the Noteholder and thus, the invested capital may be partially or completely lost. Furthermore, there is the possibility that Noteholders may invest the amounts received upon early redemption only at a rate of return which is lower than that of the Notes redeemed. 4

7 Additional Risks with respect to Notes with Underlying Linkage Investments in Notes where, irrespective of any credit linkage, the interest payment and/or the amount payable upon redemption is linked to the performance of underlyings (such as shares, share baskets, currencies, currency baskets, interest rates, interest rate structures, indices and index baskets), always include the risk that investors may receive less than their amount invested or, in extreme cases, suffer a total loss of their amount invested and/or loss of interest. The Reference Underlying a Note relates to may be subject to considerable changes, due to their composition or fluctuations in value of their components. A Note referring to more than one Reference Underlying may have a cumulative or even exponentially increased risk compared to a Note which is only related to one Reference Underlying. Noteholders may not be able to secure themselves against these different risks with regard to Notes. A material market disruption could lead to a substitution of the Reference Underlying or an early redemption of the Note, so that the risks may be realised prematurely or any original chances are lost and new risks may be incurred. Furthermore, the value of a Note, as it is dependent on one or several Reference Underlyings will accordingly also be subject to cumulative risks in the secondary market. The performance of any respective Reference Underlying is subject to a series of associated factors, including economic, financial and political events beyond the control of the Issuer. If the formula used to determine the amount of principal, premium and/or interest payable with respect to Notes linked to an underlying contains a multiplier or factor or maximum/minimum interest or repayment limits, the effect of any change in the applicable Reference Underlying will be increased with regard to the amount payable. The historical performance of the Reference Underlying may not be regarded as significant for the future performance during the term of Notes linked to an underlying. The Issuer may enter into transactions for its own account or for account of customers, which also relate to Reference Underlyings under the Notes. On the issue date of such Notes or thereafter, the Issuer and its affiliated companies may have information with regard to the Reference Underlyings which may be material to the holders of such Notes and which may not be accessible to the public or known to Noteholders. Risk Factors relating to the Commerzbank Group The Issuer is exposed to the risk described below. The realisation of these risks may have material adverse effects on the net assets, financial position and results of operations of the Group and therefore on the ability of the Issuer to fulfill its obligations from the Notes. Market and Bank-related risks The global financial market crisis has put a significant strain on the net assets, financial position and results of operations of the Group in numerous ways due to amortization, depreciation, impairments, provisions, loan defaults, etc., and it can be assumed that there may also be material adverse effects for the Group in the future, particularly in the case of a renewed escalation of the crisis. The Group is heavily dependent on the economic environment, particularly in Germany, and a possible renewed downturn in the global economy due to the global financial market crisis could lead to further substantial burdens. The Group is exposed to counterpary default risk (credit risk) that includes large individual commitments and commitments concentrated in individual sectors, so-called "cluster" commitments. The Group has extended a substantial number of large loans and advances entailing counterparty default risk (credit risk) that would have material adverse effects on the Group if realised. 5

8 Real estate finance and ship finance are exposed to risks associated in particular with the volatility of real estate and ship prices, including counterparty default risk (credit risk) and the risk of substantial changes in the values of private and commercial real estate and ships held as collateral. The Group is also exposed to credit and market risk related to bonds issued by the public sector and by other banks, particularly those in countries severely affected by the financial market crisis and its consequences. The Group has a substantial number of non-performing loans in its portfolio, and these defaults may not be sufficiently covered by collateral in combination with previously conducted write-downs and established provisions. The Group's results fluctuate a great deal and are heavily influenced by specific volatile components, in particular the net trading income, loan loss provisions and net investment income. As a result, quarterly and half-yearly results can only serve to a limited extent as indications of results in subsequent periods. It is possible that volatile and illiquid market conditions may compel the Group to perform further write-downs in the future, particularly on securities affected by the U.S. subprime crisis and on other financial instruments, or cause the Group to sustain further losses in the reduction of such portfolios. The markets for certain structured financial instruments in the Group's securities portfolio are relatively illiquid. The risk of changes in the fair value of the Group's financial instruments is not confined to its portfolio of U.S. subprime and other structured financial instruments. Changes to the classification of assets, the relevant accounting standards, regulatory environment or classifications by rating agencies may lead to a revaluation of the Group's assets such as its U.S. subprime securities, Public Finance portfolio or other structured financial instruments, and accordingly could have an adverse affect on the Group's net assets, financial position and results of operations. Contracts with bond and credit insurers, particularly monoline insurers, are exposed to a significant risk of default as these insurance companies are threatened by insolvency. The Group is exposed to credit risk related to reductions in the value of movable collateral especially in the case of financial instruments. In addition to its traditional lending business, the Group is also exposed to credit risk extending beyond the risks in traditional bank lending. The Group is exposed to market risk in the valuation of equities and investment fund units. The Group is exposed to market risk in the form of interest rate risks. The Group is exposed to market risk in the form of credit spread risks. The Group is exposed to currency risks. The Group is exposed to market risk in the form of volatility and correlation risks. The Group is exposed to market risk in the form of commodity price risks. The Group's hedging strategies could prove to be ineffective. Stricter regulatory standards applying to equity and liquidity may jeopardise the business model applied to a number of the Group's operations and have a negative impact on the Group's competitive position. 6

9 Other regulatory reforms proposed in the wake of the financial crisis, for example, statutory charges such as the bank levy, may have a major impact on the Group's business model and competitive environment. The qualification of Commerzbank as a "systemically important" credit institution could affect the Group's business. Commerzbank is affected by the outcome of stress tests, the results of which may have negative effects on the Group's refinancing costs when they are published. The regulatory capital also includes instruments whose qualification as regulatory capital may change, which means that business operations could be restricted. The European Commission's deliberations regarding the EU Framework for Bank Recovery and Resolution may result in regulatory consequences that could restrict the Bank's business operations and lead to higher refinancing costs. The Group's income or results from its brokerage business and other commission or fee-based business areas may decrease further. There is a risk that the Group may not be able to implement its strategic plans, or only implement them in part or at higher costs than planned. The synergy effects anticipated from Dresdner Bank's integration into the Group may be less than expected or begin to materialise at a later date. In addition, ongoing integration is causing considerable costs and investments that may exceed the planned limits. The Bank is exposed to the risk of being unable to retain customers in the long run as a result of the takeover of Dresdner Bank. The Group may assess the size of its customer base incorrectly and therefore base its planning on inaccurate assumptions. There is a risk that products developed by the Group cannot be launched on the market or the products it launches do not perform as expected. As a result, prior investments may prove fruitless or lead to liability risks or financing commitments. The sales partnership between Allianz and the Group regarding asset management and insurance products may not yield the expected benefits. The markets in which the Group is active particularly the German market and, specifically, activities in retail and investment banking as well as in business with corporate customers therein are characterised by heavy competition on the basis of prices and conditions, which results in considerable pressure on margins. Measures by governments and central banks to combat the financial crisis have a significant impact on the competitive environment. Due to restrictions imposed by the European Commission in connection with the stabilization measures, the Group can only engage in aggressive competition on the basis of prices and conditions to a limited extent. The Group regularly requires liquidity in order to refinance its business activities and is exposed to the risk of such liquidity not being available to it on acceptable terms and of it being unable to meet its current and future payment commitments, or being unable to do so as and when they fall due, or being unable to comply with regulatory capital requirements. The Group's options for securing longer-term refinancing would be impaired, above all, by a reduction of liquidity on the Pfandbrief markets and the capital markets generally. 7

10 A downgrade in the rating of Commerzbank, its subsidiaries or the entire Group can make refinancing more difficult and/or more expensive as well as entitle counterparties to terminate derivative transactions or call for additional collateral. Commerzbank could find it difficult to sell assets outside its core business either at reasonable prices or at all. Risks arising from the requirements and conditions attached to the government stabilization measures received by Commerzbank may have an adverse effect on the Group's profitability. The Group is exposed to a large number of operational risks including violations of compliancerelevant regulations in connection with the business activities in which it engages, such as, for example, duties relating to conduct, organization and transparency with regard to securities services and provisions intended to prevent money laundering and the financing of terrorism. It cannot be ruled out that circumstances or developments may arise that were not anticipated or were anticipated only to an inadequate extent when the operational risk models were designed. It should be expected that some components of Commerzbank's new operational risk model will be adjusted by the supervisory authorities in the course of the certification test. The Group is highly dependent on complex information technology ("IT") systems whose functionality may be impaired by internal and external circumstances. The growing significance of electronic trading platforms and new technologies may have negative implications for the Group's business activities. Particularly with respect to the Ukrainian Bank Forum, but also with respect to other holdings in listed and unlisted companies, Commerzbank is exposed to particular risks associated with the soundness and manageability of such holdings. It is possible that goodwill reported in the consolidated balance sheet will have to be written down, in full or in part, as a result of impairment tests. Commerzbank is subject to risks arising out of the possibility that claims are asserted under letters of comfort issued by it. The Group is exposed to risks on account of direct and indirect pension obligations. A further increase in the contributions to the German Pensions Protection Fund would put considerable strain on the Group's financial position and results of operations. It is not certain whether the Group will continue to succeed in attracting and retaining qualified staff in the future. The Group is subject to various reputational risks. The Group may be exposed to risks that are either not identified or inadequately appraised by the present risk management. Legal and regulatory risks Claims for damages on the grounds of flawed investment advice have led to substantial charges and may in the future also lead to further substantial charges for the Group; furthermore, damages, warranty and rescission actions have been brought against Commerzbank and its subsidiaries. There can be no guarantee that the Group will be able to fulfill the requirements imposed by the European Commission in respect of the government stabilization assistance received by it and in respect of which the Group has given undertakings to SoFFin, or that the Group will be able to fulfill these requirements on time or to a sufficient degree, or that it will not suffer economic disadvantages in connection with the fulfillment of these requirements. 8

11 The regulatory and banking supervisory frameworks within which the Group operates in the various jurisdictions in which it is active may change at any time, and non-compliance with regulatory provisions may result in the imposition of penalties and other disadvantages, including the loss of official licenses. There is a risk that the Group will be called upon to indemnify the German Deposit Protection Fund against losses the fund incurs by providing assistance in favor of a Commerzbank subsidiary. There is a risk that the Deposit Protection Fund will claim increased contributions from the Group or that the Group will be required, independently of the Deposit Protection Fund, to make contributions to help salvage banks that find themselves in economic difficulties. The planned introduction of an EU-wide deposit protection scheme would result in a financial burden on the Group in the form of the payment of substantial contributions, which probably cannot be passed on to the market. Commerzbank and its subsidiaries are subject to claims, including in court proceedings, for payment and restoration of value in connection with profit participation certificates and trust preferred securities it issued. The outcome of such proceedings may have considerable negative effects, beyond the claims asserted in each case, and may adversely affect the Group's net assets, financial position and results of operations. Proceedings brought by regulators, supervisory authorities and prosecutors may have material adverse effects on the Group. Divestments may also result in payment obligations and reputational harm. The measures that the Group has taken for the purposes of data protection and to ensure data confidentiality could prove to be inadequate and have an adverse effect on the Group and its reputation. The legal relationships between the Group and its customers are based on standardised contracts and forms designed for a large number of business transactions; problems in the individual provisions of this documentation or errors in this documentation may therefore affect a large number of customer relationships. The outcome of legal disputes to which the Group is not a party can have adverse consequences for the Group, for a number of different reasons, including the contesting of practices and clauses customarily used throughout the entire sector. The Group is subject to risks associated with tax audits; changes to tax legislation or jurisprudence may have an adverse effect on its net assets, financial position and results of operations. The European Commission has launched an antitrust investigation against Commerzbank and 16 other companies in the financial sector relating to the market for financial information on credit default swaps. 9

12 General Description of the Programme Issuer: Determination Agent: Paying Agents: Regulatory Matters: Type of Notes Currencies: Amount: Listing: Selling Restrictions: Commerzbank Aktiengesellschaft Commerzbank Aktiengesellschaft Commerzbank Aktiengesellschaft, Frankfurt am Main, shall be Principal Paying Agent. The Issuer is entitled to appoint other banks of international standing as Principal Paying Agent or additional Paying Agents. Any issue of Notes denominated in a currency in respect of which particular laws, regulations, guidelines, policies and central bank requirements apply will only be issued in circumstances which comply with such laws, regulations, guidelines, policies and central bank requirements from time to time. The Notes are linked to one or more Reference Entities and therefore subject to the occurrence of one or more Credit Events and may be also subject to Trigger Events related to those Reference Entities. In addition to such Credit Linkage, the Notes may be linked to Reference Underlyings, e.g. the amounts payable under the Notes are linked to the performance of certain underlyings (such as shares, share baskets, currencies, currency baskets, interest rates, interest rate structures, indices and index baskets). The Credit-Linkage and/or the linkage to Reference Underlyings can be limited to the payment of interest ("Principal Protected Notes") or such Credit Linkage or linkage to Reference Underlyings may also apply to the payment of principal ("Derivative Notes"). The relevant Final Terms may provide that the Derivative Notes are redeemable in cash or by delivery of a given number of the Deliverable Obligation(s). Subject to any applicable legal or regulatory restrictions, and requirements of relevant central banks, Notes may be issued in Euro or such other freely transferable currencies or currency units (each an "Alternative Currency") as may be specified in the Final Terms. The maximum aggregate principal amount of all Notes outstanding at any one time under the Programme will not exceed 5,000,000,000 (or its equivalent in an Alternative Currency). Application will be made to list the Notes to be issued under the Programme on the regulated market (regulierter Markt) of the Stuttgart Stock Exchange (Baden- Württembergische Wertpapierbörse). Notes may also be listed on any other stock exchange (an "Alternative Stock Exchange") or may be unlisted as specified in the relevant Final Terms. Each issue of Notes will be made in accordance with the laws, regulations and legal decrees and any restrictions applicable in the relevant jurisdiction. Any offer and sale of the Notes is subject to the selling restrictions in particular in the member states to the Agreement on the European Economic Area (EEA), in the United States, the United Kingdom and Switzerland. 10

13 Summary of the Programme Terms and Conditions of the Notes Form of Notes: The Notes shall be issued in bearer form. Series of Notes with respect to which the U.S. Treasury Regulation (c)(2)(i)(c) ( TEFRA C ) applies will be represented by a Permanent Global Note. Series of Notes with respect to which the U.S. Treasury Regulation (c)(2)(i)(d) ( TEFRA D ) will initially be represented by a Temporary Global Note. The Temporary Global Note will be exchanged for a Permanent Global Note not earlier than 40 days after the relevant issue date upon certification of non-u.s. beneficial ownership. Credit-Linkage: Reference Entities: Credit Events: Trigger Events: Credit-Linkage of Interest Payments: The Notes to be issued are linked to one or more Reference Entities and therefore are subject to the occurrence of one or more Credit Events and may also be subject to Trigger Events related to those Reference Entities. Therefore, the payment of interest under the Notes (in the case of Principal Protected Notes) and the repayment of principal depend on whether one or more Credit Linkage Events in relation to one or more Reference Entities occur. The applicable Final Terms will specify one or more Reference Entities, which will be private sector entities or public sector entities (e.g. sovereign states) and will contain information on the relevant Reference Entities. The Reference Entity or the relevant portfolio of Reference Entities may be subject to adjustment upon the occurrence of Succession Events. Upon the occurrence of a Succession Event with respect to any Reference Entity, such Reference Entity will be replaced by (a) Successor(s). The applicable Final Terms will contain provisions regarding the selection of the Successor(s). The Final Terms may provide for one or more of the following Credit Events: Failure to Pay, Obligation Acceleration, Restructuring, Bankruptcy, Repudiation/Moratorium, as specified in the applicable Final Terms. A Trigger Event occurs if during the relevant Observation Period (i) the offer price of the Credit Default Swap Spread linked to the Reference Entity or one of the Reference Entities is greater than a certain level, (ii) the weighted average of the Credit Default Swap Spreads linked to each of the Reference Entities is equal to or greater than a certain level, or (iii) the market price of the Notes falls below a certain level, each such level being specified in the Final Terms. The offer price for a Credit Default Swap Spread is the market offer price payable for a Hypothetical Credit Default Swap with a certain maturity and nominal amount (as specified in the Final Terms) providing for the respective credit protection. The Final Terms may provide that in case of interest-bearing Notes, the Credit Linkage applies to the interest payments to be made under the Notes. In such case the Notes (i) will cease to bear interest, or (ii) interest will be adjusted in accordance with a formula reflecting the occurrence of the Credit Linkage Event. In the case of more than one Reference Entity, the Final Terms may provide that each Credit Linkage Event will affect the interest payments to be made or that a particular Credit Linkage Event out of several such events will have such effect. In each of the above cases, the Final Terms will provide for the interest adjustment formula and explain the mathematical effect of the occurrence of a Credit Linkage Event. 11

14 Credit-Linkage of Principal Payment: In the case of Derivative Notes only, the Final Terms may provide that the Credit Linkage also applies to payments of capital to be made under the Notes, which means that payment of capital will be adjusted (including in certain cases an up-ward adjustment) in accordance with a formula reflecting the occurrence of the Credit Linkage Event. In the case of one Reference Entity or Nth-to-Default, the Notes will be redeemed early upon occurrence of one and/or the Credit Event relating to the Nth Reference Entity and/or Trigger Event, as specified in the Final Terms. Irrespective of a Credit Event, the redemption amount may be adjusted upon the occurrence of a Trigger Event in accordance with a certain formula, as specified in the Final Terms. The Derivative Notes may be redeemable, either in cash or by delivery of a given number of the Deliverable Obligation(s) as specified in the relevant Final Terms. Also the Final Terms may provide that the Notes shall automatically terminate and the Issuer shall not owe any redemption payment upon the occurrence of a Credit Event if the Adjusted Principal Amount has been reduced to zero for the first time. Interest: Fixed Rate Notes: Floating Rate Notes: The Final Terms can provide that the Notes are issued as interest bearing or noninterest bearing Notes (including Zero Coupon Notes). Fixed rate interest will be payable on such basis as agreed between the Issuer and the relevant dealer (as indicated in the applicable Terms and Conditions and the Final Terms of each Series of Notes). Floating Rate Notes will bear interest on such basis as may be agreed between the Issuer and the relevant dealer (as set out in the applicable Terms and Conditions and the Final Terms of each Series of Notes). The Margin, if any, relating to such floating rate will be agreed between the Issuer and the relevant dealer for each Series of Floating Rate Notes. Interest periods for Floating Rate Notes will be one, two, three, six or twelve months or such other period(s) as may be agreed between the Issuer and the relevant dealer, as set out in the applicable Terms and Conditions and the Final Terms of each Series of Notes. Other provisions in relation to Floating Rate Notes and structured Notes: Dual Currency Notes: Non-Interest Bearing Notes and Zero Coupon Notes: Floating Rate Notes and structured Notes may also have a maximum interest rate, a minimum interest rate or both. Interest on Floating Rate Notes and structured Notes in respect of each Interest Period, as selected prior to issue by the Issuer and the relevant dealer, will be payable on such Interest Payment Dates specified in, or determined pursuant to, the applicable Terms and Conditions and the Final Terms and will be calculated as indicated in the applicable Terms and Conditions and the Final Terms. Payments (whether in respect of principal or interest and whether at maturity or otherwise) in respect of Dual Currency Notes will be made in such currencies, and based on such rates of exchange, as indicated in the applicable Final Terms. Non-interest bearing Notes and Zero Coupon Notes may be offered and sold with such features as specified in the applicable Final Terms. 12

15 Principal Protected Notes: Derivative Notes: Adjusted Principal Amount: Cash Settlement Amount: Unless redeemed early, Principal Protected Notes will be redeemed at maturity, at an aggregate of 100% or more of their principal amount. The Redemption Date in relation to the principal amount at maturity will be specified in the applicable Final Terms. Derivative Notes do not provide for principal protection upon redemption. In addition to the credit linkage the applicable Final Terms may provide for the Redemption Amount to be linked to one or more Reference Underlyings, specifying the determination of such asset linkage at maturity, subject to the occurrence of market disruption or adjustment events. In such a case, the applicable Final Terms will contain related risk factors, if applicable. The Notes will be redeemed at the Redemption Amount unless a Trigger or one or more Credit Events have occurred in which case redemption will be made either in cash or by physical delivery of a given number of the Deliverable Obligation(s), as specified in the applicable Final Terms. The Adjusted Principal Amount will cause an adjustment of the (Early) Redemption Amount, which would be paid if no relevant Credit Event occurred, or be equal to the amount payable upon redemption. Each calculation of an Adjusted Principal Amount will be based on the Final Price of a Reference Obligation (as further described below) of the affected Reference Entity. However, the number of Credit Events that have already occurred as well as the fact that a number of Reference Entities (if any) have not been affected by Credit Events will be taken into account. Thus, the Adjusted Principal Amount may successively decrease or increase, as specified in the applicable Final Terms, taking into account any Credit Event which may subsequently occur. The Cash Settlement Amount will be determined in accordance with 7 of the Terms and Conditions. Similar to the Adjusted Principal Amount, it may be determined on the basis of the Final Price of a Reference Obligation (as further described below) of the affected Reference Entity. However, it will, as a rule, not take into account the value of obligations relating to Reference Entities which have not been affected by a Credit Event. The calculation of the Cash Settlement Amount may differ depending on the Final Terms and what kind of Credit Event has occurred. The Final Terms will provide for specific valuation or quotation methods (including an auction organised by the International Swaps and Derivatives Association, Inc. ("ISDA")) for the purposes of calculating the Final Price. Such calculations will be made subsequent to the occurrence of the Credit Event on the relevant pre defined Valuation Date. The Final Terms may also stipulate and thus preset the Final Prices with respect to each Reference Entity, including a Final Price which could be zero. Spread Cash Settlement Amount: Trigger Cash Settlement Amount: In the case of certain Notes (upon the occurrence of a Trigger Event not relating to the market price of the Notes) the payable Spread Cash Settlement Amount will be determined on the basis of the aggregate of the current market values of Hypothetical Credit Default Swaps relating to the Reference Entities. In the case of certain Notes (upon the occurrence of a Trigger Event relating to the market price of the Notes) the payable Trigger Cash Settlement Amount will be determined on the basis of the current market value of the Notes. 13

16 Physical Settlement Amount The Physical Settlement Amount will be determined in accordance with 7 of the Terms and Conditions as the pro-rata portion of the Outstanding Principle Balance or Due and Payable Amount of the Deliverable Obligation(s), which in general will equal the outstanding aggregate Principal Amount of the Notes, unless otherwise specified in the Final Terms. Deliverable Obligation(s) are obligations of the Reference Entity selected by the Issuer which satisfy the relevant Deliverable Obligation Categories and Deliverable Obligation Characteristics set out in the Final Terms. The market value of the selected Deliverable Obligation(s) delivered following the occurrence of the Credit Event will not be taken into account. In the case of a remaining fraction of the Deliverable Obligation(s) the Final Terms may provide for a payment of a cash amount equal to the value of such fraction of the Deliverable Obligation as stated in the Physical Settlement Amount. Under certain circumstances, as specified in the Final Terms, the Issuer is not obliged to transfer the Deliverable Obligations. In this case the Issuer shall pay the Partial Cash Settlement Amount as determined in the applicable Final Terms. Redemption at Maturity and Early Redemption: Early Redemption for Taxation reasons: Substitution of Issuers; Branch Designation: The applicable Final Terms will indicate either that the Notes cannot be redeemed prior to their stated maturity (except due to occurrence of a Credit Linkage Event, for taxation reasons, or upon the occurrence of an event of default) or that the Notes will be redeemable at the option of the Issuer and/ or the Noteholders upon giving notice within the notice period (if any) indicated in the applicable Final Terms, as the case may be, on a date or dates specified prior to such stated maturity and at a price or prices and on such terms as indicated in the applicable Final Terms. Early redemption for taxation reasons will be permitted as provided in 9 of the Terms and Conditions of the Notes. Any company may at any time during the life of a Series of Notes assume all the obligations of the Issuer according to 13 of the Terms and Conditions of each Series of Notes. Upon any such substitution, such substitute company (the "New Issuer") shall succeed to, and be substituted for, and may exercise every right and power of the Issuer under the Terms and Conditions of the Notes with the same effect as if the New Issuer had been named as the Issuer thereunder. The Issuer may at any time, designate any branch or office of the Issuer outside the Federal Republic of Germany as the branch or office primarily responsible for the due and punctual payment in respect of the Notes then outstanding and the performance of all of the Issuer's other obligations under all the Notes then outstanding. Denominations of Notes: Taxation: The Notes may be issued in such denominations as set out in the Terms and Conditions and the Final Terms of each Series of Notes or in each case, such other minimum denomination as may be allowed or required from time to time by the relevant central bank (or equivalent body) or any laws or regulations applicable to the relevant currency. Payments of principal and interest in respect of the Notes will be made without withholding or deduction for or on account of any present or future taxes or duties of whatever nature imposed or levied by or on behalf of the Federal Republic of Germany, or any political subdivision or any authority thereof or therein having power to tax unless such withholding or deduction is required by law. In the event that taxes or duties are imposed or levied, the Issuer will, subject to the exceptions set forth in 9 of the relevant Terms and Conditions, pay such additional amounts as shall be necessary in order that the net amounts received by the Noteholders of the Notes after such 14