Standard & Poor’s put its A rating of Commerzbank on CreditWatch negative (CWN) yesterday (Thursday), saying that it expects the German bank’s rebalancing of its business model to be more challenging than previously assumed.

“We now believe Commerzbank’s process of rebalancing its business model may be more complex and more time consuming than we previously assumed and that it may take longer to generate stronger and sustainable earnings,” said S&P.

Commerzbank on Monday announced a loss of approximately Eu720m for the fourth quarter of 2012 and issued a profit warning that S&P said suggests Commerzbank’s “ongoing poor performance” could be below the rating agency’s previous base case expectations.

“We now sense Commerzbank may find it more difficult to generate stronger, more stable, and sustainable earnings that are more in line with similarly rated banks, continue to reduce its high credit and market risk concentrations, and improve its below-average credit performance,” it said. “We also believe the bank may have limited leeway for error in manoeuvring in difficult markets.”

The rating agency said it expects to resolve the CreditWatch within three months after getting more information from Commerzbank’s results and plans. It said that it is unlikely that ratings will be cut by more than one notch.