Corporate Governance at Commerzbank - A solid governance structure as basis for economic success

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Corporate Governance at Commerzbank - A solid governance structure as basis for economic success
Corporate Governance at Commerzbank
A solid governance structure as basis for economic success

 Commerzbank AG | Group Investor Relations | Frankfurt | June 2019
Corporate Governance at Commerzbank - A solid governance structure as basis for economic success
Commerzbank            Corporate            Supervisory       Board of Managing   Sustainability and
                                                                                                        Appendix
 Group Structure       Governance              Board               Directors             CSR

Corporate Governance at Commerzbank – a solid governance structure
as basis for economic success

           Solid governance framework in line with German Corporate Governance Code
           › Diverse Supervisory Board in terms of gender, nationality and age structure
           › All shareholder representatives on the Supervisory Board are independent in compliance with
             German legislation and the German Corporate Governance Code (DCGK)
           › Solid governance structure is underlined by above average ESG ratings (e.g. ISS Scores)

           The Members of Commerzbank’s Supervisory Board are highly experienced
           › The board comprises experienced professionals from diverse business backgrounds
           › Highly proficient in terms of digitalisation and technology – newly introduced committee supporting
             the transformation of the bank under the strategy Commerzbank 4.0
           › Composition of committees in line with DCGK, e.g. financial experts serving on audit committee

           Governance structure enables sufficient monitoring of the Board of Managing
           Directors by the Supervisory Board
           › Best practice remuneration policy for the Board of Managing Directors ensures long-termism and
             avoids inappropriate risk bearing for short-term unsustainable economic success

 Commerzbank AG | Group Investor Relations | Frankfurt | June 2019                                                 1
Corporate Governance at Commerzbank - A solid governance structure as basis for economic success
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Agenda

    1 Commerzbank Group Structure                                                                                 Page 3

    2 Corporate Governance                                                                                        Page 8

    3 Supervisory Board                                                                                           Page 12

    4 Board of Managing Directors                                                                                 Page 18

    5 Sustainability and Corporate Social Responsibility                                                          Page 28

    6 Appendix                                                                                                    Page 34

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Corporate Governance at Commerzbank - A solid governance structure as basis for economic success
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    Commerzbank Group Structure

Commerzbank AG | Group Investor Relations | Frankfurt | June 2019                                                 3
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With more than 13m customers in Germany and more than 5m in
Central and Eastern Europe, Commerzbank is a leading bank in PSBC1)
                            Commerzbank Group Structure                                                                 Current shareholder structure

                  100%                           82.3%                          69.3%                                               >5%
                                                                                                                   15%
                                                                                                                         Federal Republic
                                                                                                                         of Germany
        ~1,000 domestic branches and ~400 foreign branches (mBank),
        20 foreign operating corporate banking branches and 31
        representative offices in just under 50 countries3)

                                                                                      1)   PSBC = Private and Small Business Customers
 Commerzbank AG | Group Investor Relations | Frankfurt | June 2019                    2)   As well as five Swiss agencies in Basel, Bern, Lausanne, Lucerne and St. Gallen   4
                                                                                      3)   As of 31st December 2018
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Commerzbank 4.0 – a strategic program based on three corner-stones
to deal with challenges and succeed in future
                                            Focussed business model
                                                           We will focus on businesses in two operating segments: PSBC
                                                           and CC (Corporate Clients), discontinuing non-core activities

                                            Digital enterprise
                                                           We will transform the Bank into a digital enterprise and digitalise
                                                           80% of all relevant processes

                                            Enhancing efficiency
                                                           We will simplify the Bank, increasing efficiency by reducing costs

 Commerzbank AG | Group Investor Relations | Frankfurt | June 2019                                                               5
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Overall, our transformation is making good progress and key execution
indicators are in line with plan

                                                                                         Target 2020               Q1 2019      In line with plan?

                                           Net new customers
                                                                                               2.0                  1.2
                                           (m cumulated)                                                      (since 10/2016)

                            PSBC           Assets under Control
                                           (GER)                                             >400                   402
                                           (€bn; end of period)
   Growth
                                           Net new customers
                                                                                            >10.0                   9.7
                                           (k cumulated)                                                      (since 01/2016)

                              CC
                                           Loan Volume
                                           Corporates (€bn)
                                                                                              >85                    84

   Digital-
   isation                  Group
                                           Digitalisation ratio                              80%                   62%
                                                                                                                                   ( )
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Our shared corporate culture is embodied as ComWerte in five values

           Integrity             › Our activities are guided by integrity – compliance with laws and duties as well as credibility
                                   in our approach have been firmly anchored in Commerzbank since it was established in 1870
                                 › Integrity means we conduct ourselves in a legally and ethically impeccable manner, in keeping
                                   with statutory and internal regulations and our own value system

       Customer                  › Customer orientation is the ability to design our company, processes and products so that
      orientation                  they meet the needs of our customers
                                 › It is our objective to rapidly solve to any issues as soon as they arise

  Performance                    › We are measured by our performance – consequently, all employees deliver the best possible
                                   performance in their functions in order not only to meet, but to exceed customer expectations
                                 › In our activities, we aim to be among the market leaders – Commerzbank has long been
                                   considered as the backbone of the German Mittelstand

           Courage               › Courage shows the determination to remain open to new ideas and to accept responsibility for
                                   one’s own actions
                                 › Although the banking sector is witnessing a shift away from physical banks, Commerzbank
                                   continues to deliberately invest in its network of branches

                  Team           › Commerzbank knows that its strength is rooted in team spirit at every level – the bank could not
                                   generate any of its products without the involvement of many helping hands
                  spirit
                                 › Although the customer often only sees the final result, a successful outcome depends on the
                                   interaction of all of these team players

 Commerzbank AG | Group Investor Relations | Frankfurt | June 2019                                                               7
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    Corporate Governance

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Commerzbank’s approach to achieve a solid Corporate Governance

        The bank’s Corporate Governance approach                                         Constituents of the bank’s Governance Frameworks

 › The bank’s approach to a solid Corporate
    Governance is anchored in a responsible and
    transparent management aiming for a
    sustainable value creation.
 › Consideration is given to diversity in the
    composition of the Board of Managing
    Directors and in the election of Supervisory
    Board members to reduce the risk of prejudice.
 › Transparent reporting comprises the
    corporate governance report, non-financial
    report and remuneration report.
 › The non-financial report covers the following six
    topics: environmental protection1), treatment of
    employees, social responsibility, respect for
    human rights, combating bribery and corruption
    and the treatment of customers.

                                                                                                        1)   Further information on Sustainability and Corporate Social
 Commerzbank AG | Group Investor Relations | Frankfurt | June 2019                                           Responsibility including information on environmental        9
                                                                                                             protection confer pp. 31-33
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The German Corporate Governance Code as basis for Commerzbank’s
Governance Framework

› The German Corporate Governance Code1) comprises essential
  statutory regulations for the management and supervision of German
  listed companies with the objective to enhance the transparency and
  comprehensibility of the German Corporate Governance system.
› The Code includes nationally and internationally acknowledged
  standards to achieve good and responsible Corporate Governance.
› It aims to promote confidence in management and supervision by all
  stakeholders.
› The Code highlights the obligation of Management and Supervisory
  Boards to ensure the continuance of the firm and its sustainable value
  creation in line with the principles of the social market economy.
› The principles of the Code not only require compliance with the law,
  but also ethically sound and responsible behaviour.

         Responsible Corporate Governance is a key part of Commerzbank's self-image. We are
         unquestionably committed to the principles of good Corporate Governance. The bank provides an
         annual declaration of compliance, explaining whether we have complied with the Code.

  Commerzbank AG | Group Investor Relations | Frankfurt | June 2019                                      1)   Deutscher Corporate Governance Kodex (DCGK)   10
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Collaboration between the Supervisory Board and the Board of
Managing Directors in the German “Two-tier Board System”

                      A structure of the Board of Directors of a company                                     Executive            Control       Ownership
                      used in certain European countries, such as Germany,                                     Level               Level          Level
                      that comprises two tiers:
 Two-tier                                                                                      Two-tier     Management          Supervisory
                         › a Supervisory Board, on which representatives of                                                                    Shareholders
  Board                      employees and shareholders are represented;                       System         Board               Board

 System                  › a Management Board (Board of Managing
                                                                                                One-tier
                             Directors or Executive Board) that is concerned                                     Board (Chair & CEO)           Shareholders
                                                                                                System
                             with the day-to-day running of the business.

Supervisory Board                                                                                                     Board of Managing Directors
› The Supervisory Board supervises                                                                                    › The Board of Managing Directors
   and advises the Board of Managing                                                                                    is responsible for independently
   Directors on managing the bank.                                                                                      managing the enterprise.
› The Supervisory Board supervises                                                                                    › It is obliged to act in the bank’s
   the Board of Managing Directors in                                                                                   best interest and undertakes to
   particular with respect to compliance                                                                                increase the enterprise value of
   with all respective applicable                                                                                       the bank sustainably.
   banking supervisory regulations.                                                                                   › The Board of Managing Directors
› Furthermore, the Supervisory Board                                                                                    is responsible for the development
   is responsible for the remuneration                                                                                  and execution of the bank’s
   system of the Board of Managing                                                                                      strategy under the supervision of
   Directors.                                                                                                           the Supervisory Board.

 Commerzbank AG | Group Investor Relations | Frankfurt | June 2019                                                                                            11
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    Supervisory Board

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General information on the composition of the Supervisory Board

        The Supervisory Board of Commerzbank consists of a total of 20 members of which ten
        members are elected by the bank’s employees in accordance with the German law on co-
        determination – the remaining ten representatives are elected by Commerzbank’s shareholders.1)

Composition of the Supervisory Board2)

                                                                                                10%
                                                                                                                                          Average age of members of
                                                                                                                                          the Supervisory Board:
                                                                                                    Back-
  40%        Diversity                       40%       Nationality                                                40%
                                                                                                   ground                                        60 years
                             60%                                       60%            40%                                                 Average period of being a
                                                                                                                                          board member:
                                                                                                         10%
                                                                                                                                                  4 years
           Men        Women                         Germany                          Banking                      Industrials / Corporates
                                                    Other (EU / Non-EU)              Financial Services           Trade Unions

Independence of the Supervisory Board
           According to the German Corporate Governance Code, all representatives elected by the bank’s shareholders
           have no personal or business relationship with the bank, its corporate bodies, a controlling shareholder or a
           company affiliated with the controlling shareholder that could lead to a significant, not temporary conflict of interest.
                                                                                                        1)   In case of stalemate situations, the Chairman of the
 Commerzbank AG | Group Investor Relations | Frankfurt | June 2019                                           Supervisory Board has a double voting right              13
                                                                                                        2)   Overview includes only representatives of shareholders
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Composition of the Supervisory Board
                                                                       Dr. Stefan Schmittmann
                                                 Dr. Markus Kerber     Chairman of the Board  Anja Mikus        Dr. Victoria Ossadnik
                                                                          C C C C
                              Dr. Rainer Hillebrand                                                                             Robin J. Stalker

              Dr. Tobias Guldimann                                                                                                           Nicholas Teller
                               C                                                                                                                  C

         Sabine U. Dietrich                                                                                                                            Dr. Gertrude Tumpel-Gugerell
                      C                                                                                                                                   C

                                                                   Representatives of shareholders
                                                                     Representatives of employees

            Heike Anscheit                                                                                                                             Stefan Wittmann

             Alexander Boursanoff                                                                                                           Alexandra Krieger

                                 Gunnar de Buhr                                                                                Kerstin Jerchel

                                                  Stefan Burghardt                                            Christian Höhn
                                                                       Uwe Tschäge         Monika Fink
                                                                       Deputy Chairman

 Audit Committee    Committee for Digitalisation and Technology   Compensation Control Committee        Mediation Committee     Nomination Committee       Presiding Committee
 Risk Committee     Social Welfare Committee C indicates the Chairperson of the respective Committee

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Remuneration system of the Supervisory Board

                    Basic remuneration                                                                  Additional remuneration

Basic remuneration                                                                      Additional remuneration
(in €)                                                                                  (in €)

 Chairman of the Board                                        240,000                   Chairman Audit / Risk Committee           60,000

 Deputy Chairman of the Board                                 160,000                   Member Audit / Risk Committee             30,000

 Member of the Board                                            80,000                  Chairman of all other Committees          40,000

                                                                                        Members of all other Committees           20,000

         The additional remuneration for committee appointments is not linked or dependent on the long- or short-term
         performance of Commerzbank.
         Additional remuneration is paid for a maximum of three committee appointments, taking the figures for the three
         highest paid positions.
         In addition, each member receives an attendance fee of €1,500 for each meeting or conference call of the Supervisory
         Board or one of its committees.

 Commerzbank AG | Group Investor Relations | Frankfurt | June 2019                                                                         15
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Committees of the Supervisory Board – Committee for Digitalisation
and Technology
        To ensure that it can perform its duties efficiently, the Supervisory Board has formed eight
        committees from its members.
        To actively monitor the digital transformation of the bank in accordance with its strategy
        “Commerzbank 4.0”, the Board has set up the Committee for Digitalisation and Technology.

          The Committee for Digitalisation and Technology shall consist of at least five Supervisory Board
          members.
           As part of the Bank’s transformation into a digital technology company, the Committee for Digitalisation
           and Technology shall accompany the changes of the business model, the development of digital
           products and processes and the associated changes to the organizational structure.
           The Committee for Digitalisation and Technology receives regular reports from the Board of Managing
           Directors on relevant technological developments and the implementation of technical innovations as
           well as their effects.

           The Committee for Digitalisation and Technology supports the Supervisory Board in advising and
           monitoring the Bank’s digitalisation progress and the associated IT and investment budget.
         The Committee for Digitalisation and Technology receives regular
         reports on cyber risks and the associated information security of the Bank.

 Commerzbank AG | Group Investor Relations | Frankfurt | June 2019                                                 16
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Composition of the Committee for Digitalisation and Technology1)
                            Sabine U.                      Dr. Victoria               Dr. Stefan                     Anja                           Dr. Rainer
                            Dietrich                       Ossadnik                   Schmitt-                       Mikus                          Hillebrand
                            Chairperson                                               mann

Career                      bp Europa SE                   › E.ON Energie             › Commerzbank AG               › Arabesque GmbH               › Otto Group
                                                             Deutschland GmbH         › Bayrische Hypo- &            › Union Investment
highlights
                                                           › Microsoft Dtl. GmbH        Vereinsbank AG               › Allianz Pimco AM
                            › Former Member of the         › Current CEO of E.ON      › Former CRO2) of              › CEO/CIO3) of German          › Current Deputy Chair-
Executive                     Board of Managing              Energie Deutschland        Commerzbank                    Nuclear Waste                  man of the Board of
                              Directors of bp Europa       › Former Vice President    › Former Member of the           Disposal Fund (Public          Managing Directors of
experience                  › Former Director Risk           Data & AI Microsoft        Management Board of            Endowment)                     the Otto Group
                              and Compliance at bp           Corporation                HypoVereinsbank

                            › Various executive and        › Global VP roles in       › Various non-executive        › Former CIO3) of              › International project
International                 non-executive positions       Microsoft Corporation       mandates on super-             Arabesque Asset                management
                              at bp in UK, India,           and Oracle Corp.            visory boards and              Management London              experience
business                      Vietnam and Belgium                                       similar bodies for
experience                                                                              European banking and
                                                                                        business enterprises

                            › Establishing bp’s 1st        › Deep IT, AI and data     › Specific knowledge of        › Experiences in asset         › Digitalisation and
                              web presence in DACH          knowledge with 18 yrs       banking organisations,         management, financial          transformation of Otto
Digitalisation /            › Transformation of bp          global management           structures, processes          planning and balance           Group from mail-order
banking / finance             Group Env. Liabilities        experience at CSC,          and risk management            sheet reporting                to a digital business
knowledge                     into Life Cycle Mgmt.         Oracle and Microsoft
                            › Former Global VP
                              Remediation Mgmt.

                            › Studies of Engineering       › PhD in physics at        › Doctorate in economics       › Master of business           › Doctorate in economics
                              Sciences (Chartered           Munich University           and studies of eco-            administration at              and social sciences at
Education                     Engineer) at Technical                                    nomics at University of        Göttingen University           University of German
                              University Berlin                                         St. Gallen                                                    Federal Armed Forces

                                                                                                          1)   Overview includes only representatives of shareholders
 Commerzbank AG | Group Investor Relations | Frankfurt | June 2019                                        2)   CRO = Chief Risk Officer                                    17
                                                                                                          3)   CIO = Chief Investment Officer
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    Board of Managing Directors

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General information on the composition of the Board of
Managing Directors

        The Board of Managing Directors consists of a total of six regular members and the CEO.

Composition of the Board of Managing Directors

                      14%                                                                                              Average age of members of the
                                                                      29%                                              Board of Managing Directors:
                                                                               Back-
                          Diversity
                                                                              ground                                       53 years
                                                                                                                       Average period of being a
                                                                                           71%                         board member:
                                    86%
                                                                                                                            5 years
                        Men         Women                               Banking
                                                                        Others (Consulting, Automotive)

Female quota on the Board of Managing Directors
                           Commerzbank’s target                                                           Commerzbank’s actual
                           quota:                                                                         quota:
                                          at least 1       woman                                                       1 woman

 Commerzbank AG | Group Investor Relations | Frankfurt | June 2019                                                                                 19
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Composition of the Board of Managing Directors (1/2)
                            Martin                              Dr. Marcus                              Stephan                                Jörg
                            Zielke                              Chromik                                 Engels                                 Hessenmüller
                            CEO                                 CRO                                     CFO                                    COO
                            05.11.20101)                        01.01.2016                              01.04.2012                             15.01.2019

                                           Audit                        Credit Risk Management                          Finance                       Banking Operations

                                     Communications                         Intensive Care                         Investor Relations                   Delivery Center

                                                                       Market Risk Management                             Tax                       Information Technology

                                                                 Risk Controlling & Capital Mgmt.                      Treasury                       Markets Operations
Responsibilities
                                                                       Asset & Capital Recovery                         mBank                       Organisation & Security

                                                                     Big Data & Advanced Analytics                                             Digital Transformation & Strategy

                            › Executive Board Member            › Divisional Board Member               › Stephan Engels was directly          › Divisional Board Member
                              Private Customers                   Chief Credit Risk Officer                 appointed as CFO when he             Development & Strategy
Previous                    › Divisional Board Member           › Divisional Board Member                   joined the Executive Board         › CFO mBank S.A.
Commerzbank                   Group Finance                       Chief Market Risk Officer                                                    › Head of Investment Banking
positions                   › Group Manager Retail Banking                                                                                       Finance
                            › Group Manager Corporate
                              Banking

                            ›   Eurohypo AG                     › Deutsche Postbank AG                  ›   Daimler AG                         › mBank S.A.
                            ›   Deutsche Hyp AG                 › McKinsey & Company                    ›   DaimlerChrysler Services AG        › Dresdner Bank AG
Former employers            ›   Deutsche Bank 24                › Munich University                     ›   DaimlerChrysler Bank AG
                            ›   Deutsche Bank AG                                                        ›   debis AG & debis AirFinance
                            ›   Dresdner Bank AG                                                        ›   Daimler Benz AG

                                                                                                              1)    Martin Zielke was appointed as CEO on 1st May 2016;
 Commerzbank AG | Group Investor Relations | Frankfurt | June 2019                                                  between November 2010 and May 2016, he was regular        20
                                                                                                                    Board Member responsible for Private Customers
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Composition of the Board of Managing Directors (2/2)
                            Michael                             Dr. Bettina                           Michael
                            Mandel                              Orlopp                                Reuther
                            Board Member                        Board Member                          Board Member
                            23.05.2016                          01.11.20171)                          01.10.2006

                                    Private Customers                     Compliance                              Mittelstandsbank

                                Small Business Customers               Human Resources                            Corporate Finance

                                     comdirect bank                          Legal                           Corporates International

                                      Commerz Real                                                         Credit Portfolio Management
Responsibilities
                                                                                                                       FICC2)

                                                                                                                      Research

                                                                                                          CC Development & Digitalisation

                                                                                                           Trade Finance & Cash Mgmt.

                            › Divisional Board Member           › General Representative              › Executive Board Member
                              Private Customers                   responsible for Compliance,             Corporates & Markets
Previous                    › CEO comdirect bank AG               Human Resources and Legal           › Executive Board Member
Commerzbank                 › Group Manager Private and         › Divisional Board Member                 responsible for Treasury and
positions                     Business Customers                  Development & Strategy                  Non-Core Assets
                            › Head of Business Develop-
                              ment Private Customers

                            › McKinsey & Company                › McKinsey & Company                  › Deutsche Bank AG
                            › Dresdner Bank AG
Former employers            › Bremer Bank (Dresdner
                              Bank AG)

                                                                                                             1)    Dr. Bettina Orlopp was appointed as General
 Commerzbank AG | Group Investor Relations | Frankfurt | June 2019                                                 Representative to the Executive Board in May 2016   21
                                                                                                             2)    FICC = Fixed Income, Currencies & Commodities
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Overview of the compensation governance structure at Commerzbank
          •Information
                                                                               Supervisory Board
          •Preparation of decisions
          •Support in monitoring                                                     (SB)

                     Remuneration Control Committee (RCC)                                                                      Risk Committee (RC)
          Tasks
          -Assessing the remuneration systems (including for employees in                                Tasks
          the control units) on the basis of or with reference to the risk,
          capital, and liquidity situation of the institution                                            -Pursuant to Section 25d(12) KWG, examination of whether
                                                                                    Cooperation          incentives provided by the remuneration systems take into
          -Ensuring that remuneration systems are aligned with the business,
          risk, and remuneration strategy of the Group                                                   consideration risk, capital and liquidity, as well as the likelihood
                                                                                                         and timing of earnings
          -Supporting the Supervisory Board in the monitoring of processes
          designed to determine Risk Takers & Group Risk Takers as well as
          in creating resolution suggestions pursuant to Sect. 25a(5)(6) KWG
          -Preparation of the resolutions of the SB regarding the variable
          compensation of the members of the Board of Managing Directors

                                 •Information
                                 •Support
                                                    Appointment                Board of Managing
                                                  (after Supervisory               Directors                                                   •Information
                                                    Board hearing)                                                                             •Support

                            Remuneration Officer (RO)                                                                 Remuneration Committee (RemCo)

          Tasks                                                                                          Tasks
          -Ongoing monitoring of appropriateness                                                         -Ensuring appropriate involvement of the control units in
          -Supporting the Supervisory Board and its Remuneration Control                                 structuring and monitoring the remuneration systems as well as in
          Committee with regard to all remuneration systems                         Cooperation          regard to the process to determine Risk Takers as well as Group
          -Supporting the Remuneration Control Committee on overarching                                  Risk Takers pursuant to Section 3(3) InstitutsVergV
          issues                                                                                         -Ensuring the total amount of variable remuneration is determined
          -Preparing the remuneration control report                                                     under appropriate involvement of the control units in a manner that
          -Other issues                                                                                  is in line with their scope of responsibility

                Regulatory requirements pursuant to KWG/InstitutsVergV                 Requirements from InstitutsVergV, formal implementation at institution’s discretion
Source: Commerzbank Remuneration Report 2017, p. 5

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Key adjustments of Commerzbank’s remuneration system

› The Supervisory Board has decided to adjust Commerzbank’s remuneration system for the Board of
  Managing Directors based on the German Remuneration Ordinance for Institutions (IVV1)) after the
  Board of Directors has adjusted the non-pay-scale model for all non-pay-scale employees.
› Amendments came into force on the 1st January 2019.
› The adjusted remuneration system includes a claw back clause for variable remuneration.
› Commerzbank has already partly converted some variable components into fixed compensation for its non-
  pay-scale employees. Therefore, it is logical to partly convert variable compensation of the Members of
  the Board of Managing Directors. Thereby, the conversion includes a markdown. This adjustment shall
  increase the bank’s recruiting ability by offering a more competitive remuneration system.
› The basic logic of Commerzbank’s remuneration system remains the same. Members of the Board of
  Managing Directors still participate on the success of the Group, on their particular segment and
  their individual target achievements.
› Compared to European banks, DAX and MDAX companies, Commerzbank’s remuneration system is fair
  and adequate.

                                                                                                        1)   IVV = Institutsvergütungsverordnung (German
 Commerzbank AG | Group Investor Relations | Frankfurt | June 2019                                                                                         23
                                                                                                             Remuneration Ordinance for Institutions)
Commerzbank             Corporate            Supervisory        Board of Managing   Sustainability and
                                                                                                               Appendix
 Group Structure        Governance              Board                Directors             CSR

Effective remuneration structure of Commerzbank’s Board of Managing
Directors
Former remuneration system1)                                                          Adjusted remuneration system1)

                                                                                                                     24%
                          34%
                                                   43%
                                  ~€13.4mn                                                                                 ~€12.7mn
                                                                                                                                             60%
                                                                                                                  16%

                                  23%

      Basic salary        Short-term incentives             Long-term incentives              Basic salary         Short-term incentives           Long-term incentives

Highlights
› Commerzbank applies an appropriate and market-orientated remuneration system
  –     Compensation sets incentives for short-term and long-term performance
  –     Commerzbank does not pay excessive compensation to the Members of the Board of Managing Directors
  –     After the adjustment of the remuneration system, total compensation – if target amount is achieved – declines further
› In 2018, fringe benefits and service costs for pension entitlements amounted to €0.9mn and €3.4mn, respectively
                                                                                                          1)   Assumptions: 100% target achievement; constant share
  Commerzbank AG | Group Investor Relations | Frankfurt | June 2019                                            price; 7 Members of the Board of Managing Directors;       24
                                                                                                               pension entitlements and accessory considerations excluded
Commerzbank             Corporate            Supervisory       Board of Managing   Sustainability and
                                                                                                               Appendix
 Group Structure        Governance              Board               Directors             CSR

Commerzbank’s adjusted remuneration system includes a claw back
clause and thus increases long-term participation of Board Members

        FY                         FY+1                                             FY+2                       FY+6                          FY+7                            FY+8
                                Share price
                                                                                                                                         Share price
                                 fixing in
                                                                                                                                       fixing in March
                                 January

30%                             Determine
       Long-term                                                                                         12-month waiting
                               share-based                                                                                               Cash paid
      share-based                                                                                            period
                              compensation              Retention     period1)
                                                                           including a
                                                    retrospective performance evaluation
30%                             Determine            before long-term incentives are paid
      Long-term
                               cash-based                                                                  Cash paid
      cash-based
                              compensation

20%                             Determine
       Short-term                                   12-month waiting
                               share-based                                       Cash paid
      share-based                                       period
                              compensation

20%
      Short-term
                                Cash paid
      cash-based

                                                                                      Claw back period

        Commerzbank’s remuneration system is stretching the variable compensation – 50% share-based
        › 20% of variable compensation is payable in cash, an additional 20% is payable after a 12-month waiting period, again in
             cash but share-based.
        › The remaining 60% arises after the end of a five-year retention period and after the retrospective performance
             evaluation. Thereof, half is paid in cash and half after a 12-month waiting period, also in cash but share-based.
                                                                                                          1)   The retention period is extended by two and one year(s) for
  Commerzbank AG | Group Investor Relations | Frankfurt | June 2019                                            new Members of the Board of Managing Directors in the         25
                                                                                                               first and second year, respectively
Commerzbank             Corporate            Supervisory       Board of Managing   Sustainability and
                                                                                                          Appendix
  Group Structure        Governance              Board               Directors             CSR

The target achievements of Board Members are set between 0% and
200% – the variable remuneration is limited to 150% of target amount
  Corporate Level (70% weight)
                                                                                                                                                                 Corporate Level
  › Weighted average of target achievement based on a group-based target-                                            Target achievement
                                                                                                                                                     n-2               n-1             n

    performance comparison determined by the Economic Value Added (EVA) or                                                  0%                       …                 …               …
                                                                                                                           100%                      …                 …               …
    another ratio that may be chosen for the group.                                                                        200%                      …                 …               …

  Department Level (segment and/or shared functions; 30% weight)
                                                                                                                                                                 Segment Level
  › Target achievement by the department (segment and/or shared functions) for the                                   Target achievement
                                                                                                                                                     n-2               n-1             n

    members of the Board of Managing Directors in question is responsible on                                                0%                       …                 …               …
                                                                                                                           100%                      …                 …               …
    quantitative and/or qualitative targets.                                                                               200%                      …                 …               …

  Individual Level (Multiple of 0.7-1.3)
  › Target achievements are measured over a three-year period, with achievement of the                                             Target/Criteria                  Individual Level

    company targets for the financial year in question being given a weighting of 3/6, the                                                x1               …                 …          …

    previous year 2/6 and the year before that 1/6. The results of the three-year achievement                                             x2               …                 …          …
                                                                                                                                          …                …                 …          …
    of the company targets are then multiplied by a factor of between 0.7 and 1.3, which is                                               Sum              0%                          200%
    dependent on the achievement of the Board member’s individual targets. 0.7 corresponds                                            Multiple             0.7               1.0       1.3
    to individual target achievement of 0% (minimum), 1.0 to individual target achievement of
    100% and 1.3 to individual target achievement of 200% (maximum).

         The remuneration system provides a uniform remuneration component which is linked to overall group,
         department and individual targets.
Source: Commerzbank Annual Report 2018, pp. 29-31

   Commerzbank AG | Group Investor Relations | Frankfurt | June 2019                                                                                                                       26
Commerzbank            Corporate            Supervisory       Board of Managing   Sustainability and
                                                                                                             Appendix
 Group Structure       Governance              Board               Directors             CSR

Remuneration system of the Board of Managing Directors

       In November 2018, the Supervisory Board decided on adjustments of the remuneration system due to
       the amendment of the German Remuneration Ordinance for Institutions (IVV1)).

         Appropriate design of the remuneration system according to the German IVV

          Strategy                                               Risk, capital and liquidity                             Target setting
          The compensation system supports                       The compensation system of the Board                    The annual setting of group-wide and
          the implementation and execution of                    of Managing Directors is in line with the               individual targets for variable compen-
          the bank’s strategy and is aligned with                bank’s risk, capital and liquidity                      sation components is based on the
          the overall group risk strategy                        structure                                               bank’s overall group strategy

       The adjusted remuneration system provides part conversion of variable to fixed compensation – the
       total compensation potential decreases for all Board Members.

         Adjusted remuneration system of the Board of Managing Directors
         in €                                     fixed compensation               variable comp.                   target amount                 Ratio variable / fix

         Regular                       old                 750,000                  1,000,000                           1,750,000                           1.33
         Board Members              adjusted               990,000                     660,000                          1,650,000                           0.67

                                       old            1,312,500                     1,628,640                           2,941,140                           1.24
         CEO
                                    adjusted          1,674,247                     1,116,165                           2,790,412                           0.67

                                                                                                        1)   IVV = Institutsvergütungsverordnung (German
 Commerzbank AG | Group Investor Relations | Frankfurt | June 2019                                                                                                  27
                                                                                                             Remuneration Ordinance for Institutions)
Commerzbank            Corporate            Supervisory       Board of Managing   Sustainability and
                                                                                                       Appendix
Group Structure       Governance              Board               Directors             CSR

    Sustainability and Corporate Social Responsibility

Commerzbank AG | Group Investor Relations | Frankfurt | June 2019                                                 28
Commerzbank            Corporate            Supervisory       Board of Managing   Sustainability and
                                                                                                             Appendix
 Group Structure       Governance              Board               Directors             CSR

Sustainability ratings substantiate our vision to become Germany’s
most sustainable commercial bank
Commerzbank’s Sustainability Ratings

                           Outper-                 › “The company is considered an outperformer on ESG issues compared to its industry
                           former                      peers. This stems from its leading position on environmental issues, outperformance
                                                       on social issues and its average performance on governance issues.”
                            75/100 Points

                          Prime/C                  › “Commerzbank has established a group-wide code of conduct covering all important
                                                       issues, such as corruption, antitrust violations, insider dealings and conflicts of
                           Sector Avg.: D+             interest in varying degrees of detail.”

                                A                  › “We assess the company is well prepared policy-wise, to mitigate the negative impact
                                                       of […] its long-expected restructuring.”

                                B
                                                   › CDP’s rating scoring system is based on a pyramid like model in which companies
                                                       have to fully satisfy each increasingly tougher grading pillar before they can advance
                                                       to the next level. Levels go from Disclosure (D-/D) to Leadership (A-/A).

                              Low                  › ISS QualityScores are offering an indication on the extent of non-financial disclosure
                                                     relating to ESG – scale from 1 to 10, whereby 1 indicates the lowest ESG risk
                             Risk1)                › Commerzbank’s ISS QualityScores:1) Environment = 1 / Social = 2 / Governance = 4

 Commerzbank AG | Group Investor Relations | Frankfurt | June 2019                                      1)   ISS QualityScores as of 1 June 2019   29
Commerzbank            Corporate            Supervisory       Board of Managing   Sustainability and
                                                                                                              Appendix
  Group Structure       Governance              Board               Directors             CSR

We are a leading German provider of Renewable Energy Project Finance
funding – inaugural Green Bond issued in October 2018
Renewable Energy Project Finance Portfolio                                           Portfolio Breakdown1)
(Exposure at Default, €bn end of period)

                                                                                                                                                  69%
                                                                                                         1%
                                     +20%                                                       18%

                          4.0         4.1         4.2         4.2        4.2                                                                    invested in Germany
   3.5         3.8
                                                                                          12%       €4.2bn

                                                                                                                 69%                         31%
                                                                                                                                       invested globally

 2013         2014       2015        2016        2017       2018 Q1 2019                        Wind Onshore           Wind Offshore           Solar    Others

Commerzbank Green Bond Framework                                                     Commerzbank’s Inaugural Green Bond
                                                                                     › On 16th October 2018, Commerzbank issued its inaugural
                                  Use of Proceeds
                                                                                         Green 5-yrs €500m Non-Preferred Senior Bond.

                                  Project Evaluation                                 › Robust green bond framework in accordance with the Green
                                                                                         Bond Principles 2018 – SPO2) provided by Sustainalytics.
                                  Management of Proceeds                             › €503m eligible wind and solar assets from vintages 2016-
                                                                                         2018 assigned to the Green Bond.
                                  Reporting
                                                                                     › With a total installed capacity of 461.8 MW, the loans
                                                                                         underpinning the Green Bond help to avoid estimated CO2
                                  External Review                                        emissions of ~755,242 tons p.a. contributing to five SDGs.3)
                                                                                                         1)   Based on Energy Portfolio as of Q1 2019
  Commerzbank AG | Group Investor Relations | Frankfurt | June 2019                                      2)   SPO = Second Party Opinion                          30
                                                                                                         3)   SDG = Sustainable Development Goals
Commerzbank            Corporate            Supervisory       Board of Managing   Sustainability and
                                                                                                        Appendix
 Group Structure       Governance              Board               Directors             CSR

Positions and policies on environmental and social issues (1/2)
In 2011, Commerzbank stopped
issuing any new exchange-traded                                                                           The assessment takes into
investment products based on                                                                              account the mining methods used
food staples such as wheat, corn,                                                                         by the company, the
soya, rice and potatoes.                                                                                  implementation of ecological
                                                                                                          restoration measures, and
                                                                                                          compliance with human rights and
                                                           Agricultural
                                                                                                          occupational health and safety
                                                                                                          standards.
The guideline of Commerz-
bank AG governing coal-
related transactions covers
                                                           Coal power
                                                                                                                   In the case of customer
the process chain, from coal                                                           Mining
                                                                                                                   relationships and transactions
extraction to coal-fired
                                                                                                                   relating to oil and gas,
electricity generation at
                                                                                                                   Commerzbank performs
power plants. Commerzbank
                                                                                                                   assessments of how oil and gas
does not finance new coal-                                                            Oil & gas                    fields are explored, how High
fired power plants or new
                                                                                                                   Conversation Value Areas are
coal mines. Transactions
                                                                                                                   protected, and how compliance
related to modernisation
                                                                                                                   with human rights and
measures are reviewed on a
                                                                                                                   occupational health and safety
case-by-case basis and may
                                                                                                                   standards is ensured.
be rejected.

          We incorporate the early identification and appropriate handling of environmental and social
          risks based on sustainable and ethical decision-making criteria into our overall risk strategy

 Commerzbank AG | Group Investor Relations | Frankfurt | June 2019                                                                                  31
Commerzbank            Corporate            Supervisory       Board of Managing   Sustainability and
                                                                                                              Appendix
 Group Structure       Governance              Board               Directors             CSR

Positions and policies on environmental and social issues (2/2)

Commerzbank does not finance                                                                                             Concerning customer relationships
the supply of weapons or                                                                                                 and transactions related to power
armaments to conflict zones or                                                                                           generation, compliance with
areas of tension, nor does it                                                                                            human rights, the protection of
finance controversial weapons.                                                                            Power
                                                                                                        generation       High Conversation Value Areas
The recipient must be a clearly                                                                                          and the implementation of
identifiable governmental body.                               Arms trade                                                 environmental impact
                                                                                                                         assessments are subject to
                                                                                                                         particular scrutiny.

                                                                                          Human
                                                                                          rights
                                                                                                                         Commerzbank is committed to
                                                 Land and                  Indigenous                                    respecting human rights as
                                                  forestry                   peoples
                                                                                                                         defined by internationally accepted
                                                                                                                         human rights standards. Within its
                                                                                                                         sphere of influence, Commerzbank
                                                                                                                         makes a differentiated contribution
In addition to environmental and
                                                                                                                         to the protection and promotion of
social conditions regarding                                    Commerzbank’s commitment to                               human rights.
cultivation and exploitation,                                  fundamental human rights includes
Commerzbank also examines                                      special protection of indigenous
compliance with sustainable                                    peoples, who are often subjected
standards for palm oil production.                             to compulsory measures such as
                                                               involuntary resettlement and
                                                               displacement.

 Commerzbank AG | Group Investor Relations | Frankfurt | June 2019                                                                                        32
Commerzbank                           Corporate        Supervisory   Board of Managing    Sustainability and
                                                                                                                    Appendix
 Group Structure                      Governance          Board           Directors              CSR

Environmental and social risk management process
 Operational Unit

                                                   Request
                                (Product, transaction, business relationship)

                                 Linked to sensitive topic area?                                                Business can be pursued
                                                                                          No

                                Yes

                                                                                                     Product, transaction or business
                                   Linked to exclusion criteria?
                                                                                          Yes         relationship has to be rejected
 Reputational Risk Mgmt.

                                                         No

                                                              Review of sector-
                            Review of cross-
                                                                  specific
                           sector requirements
                                                               requirements
                                                   Evaluation

                                                                                                           May lead to a rejection of product,
                                   Differentiated assessment
                                                                                                          transaction or business relationship

 Commerzbank AG | Group Investor Relations | Frankfurt | June 2019                                                                               33
Appendix

Commerzbank AG | Group Investor Relations | Frankfurt | June 2019   34
Commerzbank            Corporate            Supervisory       Board of Managing   Sustainability and
                                                                                                        Appendix
 Group Structure       Governance              Board               Directors             CSR

Committees of the Supervisory Board – General information (1/2)
  Committee                                                                    Description of activities

                                    › Supporting the Supervisory Board in the monitoring of:
Audit                                    › the accounting process
Committee                                › the effectiveness of the compliance and risk management
                                         › the performance of the audits

Committee for
                                    › Supporting the Supervisory Board in advising and monitoring the bank’s
Digitalisation &
                                      digitalisation progress and the associated IT and investment budget
Technology

                                    › Supporting the Supervisory Board in the appropriate structuring of the
Compensation
                                      compensation systems of the Board of Managing Directors
Control
                                    › Monitoring the appropriate structure of the compensation systems of the employees
Committee
                                    › Shall cooperate with the Risk Committee

Mediation                           › The functions and composition of the Mediation Committee are established by
Committee                             Section 27, paragraph 3 of the German Co-determination Act

 Commerzbank AG | Group Investor Relations | Frankfurt | June 2019                                                   35
Commerzbank            Corporate            Supervisory       Board of Managing   Sustainability and
                                                                                                        Appendix
 Group Structure       Governance              Board               Directors             CSR

Committees of the Supervisory Board – General information (2/2)
  Committee                                                                    Description of activities

                                    › Recommending appropriate shareholder representative candidates to the
Nomination                            Supervisory Board for it to propose at the General Meeting
Committee                           › Supporting the Supervisory Board in the elaboration of an objective to promote the
                                      representation of the under-represented gender

                                    › Responsible for concluding and altering employment contracts with the members of
Presiding                             the Board of Managing Directors
Committee                           › Responsible for terminating the employment contracts of the members of the Board
                                      of Managing Directors

                                    › Monitoring of the bank’s risk situation and management, devoting particular
Risk
                                      attention to the overall risk strategy, the sub-risk strategies and credit, market,
Committee
                                      liquidity, operational, reputational and compliance risks

Social Welfare                      › Responsible for all personnel and social issues which are of general relevance for
Committee                             employees

 Commerzbank AG | Group Investor Relations | Frankfurt | June 2019                                                          36
For more information, please contact Commerzbank’s IR team

Christoph Wortig (Head of Investor Relations)
                                                                                                                Mail: ir@commerzbank.com
P: +49 69 136 52668
                                                                                                                www.ir.commerzbank.com
M: christoph.wortig@commerzbank.com

Ansgar Herkert (Head of IR Communications)
P: +49 69 136 44083
M: ansgar.herkert@commerzbank.com

Institutional Investors and Financial Analysts
Michael H. Klein                                                     Jutta Madjlessi
P: +49 69 136 24522                                                  P: +49 69 136 28696
M: michael.klein@commerzbank.com                                     M: jutta.madjlessi@commerzbank.com

Corporate Governance / ESG
Dirk Bartsch (Head of Strategic IR &
Rating Agency Relations)                                             Matthias Obst
P: +49 69 136 22799                                                  P: +49 69 136 26430
M: dirk.bartsch@commerzbank.com                                      M: matthias.obst@commerzbank.com

Financial calendar
                                                          07 Aug                                              07 Nov
  2019
                                                     Q2 2019 results                                      Q3 2019 results

 Commerzbank AG | Group Investor Relations | Frankfurt | June 2019                                                                         37
Disclaimer

This presentation contains forward-looking statements. Forward-looking statements are statements that are not historical facts; they include,
inter alia, statements about Commerzbank’s beliefs and expectations and the assumptions underlying them. These statements are based on
plans, estimates, projections and targets as they are currently available to the management of Commerzbank. Forward-looking statements
therefore speak only as of the date they are made, and Commerzbank undertakes no obligation to update any of them in light of new
information or future events. By their very nature, forward-looking statements involve risks and uncertainties. A number of important factors
could therefore cause actual results to differ materially from those contained in any forward-looking statement. Such factors include, among
others, the conditions in the financial markets in Germany, in Europe, in the United States and elsewhere from which Commerzbank derives
a substantial portion of its revenues and in which it hold a substantial portion of its assets, the development of asset prices and market
volatility, potential defaults of borrowers or trading counterparties, the implementation of its strategic initiatives and the reliability of its risk
management policies.

In addition, this presentation contains financial and other information which has been derived from publicly available information disclosed by
persons other than Commerzbank (“external data”). In particular, external data has been derived from industry and customer-related data
and other calculations taken or derived from industry reports published by third parties, market research reports and commercial publications.
Commercial publications generally state that the information they contain has originated from sources assumed to be reliable, but that the
accuracy and completeness of such information is not guaranteed and that the calculations contained therein are based on a series of
assumptions. The external data has not been independently verified by Commerzbank. Therefore, Commerzbank cannot assume any
responsibility for the accuracy of the external data taken or derived from public sources.

Copies of this document are available upon request or can be downloaded from
https://www.commerzbank.de/en/hauptnavigation/aktionaere/governance_/corporate_governace_1.html

  Commerzbank AG | Group Investor Relations | Frankfurt | June 2019                                                                               38
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