Commerzbank, Germany's third-biggest bank and a big player in global finance, lost nearly 300m euros in 2002, the first time in its history that it has plunged into the red.

The third straight year of falls on stock markets around the world combined with the parlous state of the economy at home to produce the loss, the company said.

We are not wasting time with full or partial mergers... the time is just not right for that Klaus-Peter Mueller Commerzbank chief executive

Extra provisions for bad and risky loans, up more than 30% on 2001 to 1.32bn euros, were also part of the problem.

Commerzbank's losses after tax totalled 298m euros, after a 102m euro profit in 2001.

Hard times

While acknowledging the disappointing figures, the group said the banking environment in Germany was the worst it had seen in the half-century since World War Two.

The merger business, chief engine behind corporate banking income, has ground to a standstill in Germany.

Investments, meanwhile, have soured along with the two-thirds decline in the value of the blue-chip Dax in 2002.

At the same time, small businesses are going bust by the thousand, increasing the amount German banks have to set aside to cover actual and potential bad debts.

No merger?

The bank's troubles may well end up setting back plans for consolidation in Germany's banking sector.

Commerzbank and HVB Group have talked about a possible merger, but each is likely to prefer to get its house in order before making any serious move.

"We are not wasting time with full or partial mergers," said chief executive Klaus-Peter Mueller. "The time is just not right for that."

Future prospects, though, look more promising, with a promise from the board of directors that the company will return to the black in 2003 "even under adverse conditions" - thanks in part to ongoing cost-cutting.

It is still planning a 10 euro cent dividend, while its core capital ratio - the key metric which determines how healthy a bank is - rose over the past year from 6% to 7.3%.