SPIEGEL: Mr. Blessing, you have recently again used a good portion of your annual salary to purchase Commerzbank shares. What are you -- a gambler or an incorrigible optimist?

Blessing: Neither. I'm a long-term investor and a staunch supporter of Commerzbank. In this combination, I feel very good about my investment.

SPIEGEL: Despite the fact that you once purchased shares at a price of €30 ($39) and the shares are now worth €1.17 ($1.53)?

Blessing: I have purchased Commerzbank shares on a regular basis and have never sold any -- and I won't do so, either, as long as I'm active. Of course Commerzbank shares have been hit hard by the financial and sovereign debt crisis over the last few years. But that is true of all shares, particularly shares in banks.

SPIEGEL: Not many have fallen from 30 to just one euro in value. How far would the price have to rise for you to recoup your losses?

Blessing: The current price would have to roughly triple.

SPIEGEL: Taxpayers -- who will still have nearly a 20 percent stake in the Commerzbank even after the planned capital increase -- aren't doing any better. How do you intend to triple the price?

Blessing: Until now, there have been two reasons to take a critical view of Commerzbank shares. First, there was the question of how and when we can pay back the silent participation. We have now answered that. The second question has always been how quickly the bank could manage to divest itself of its non-core business. Many people would like to invest in the core bank alone, as investors constantly tell me.

SPIEGEL: And how do you answer the second question?

Blessing: In late 2012, these business activities -- public-sector financing, shipping financing and commercial real estate financing -- still made up €151 billion. By 2016, we intend to reduce this to slightly more than €90 billion. Currently, these reductions are going faster than planned.

SPIEGEL: Even then, over one third of your securities and credit portfolios will still consist of toxic assets in four years.

Blessing: No, today it is down to one third. In four years, we aim for it to be only roughly 15 percent. But the key thing here is that a large proportion of this is made up of German bonds and property financing. I'm currently not worried about that. We have nearly €9 billion in Italian sovereign bonds, and another €2.6 billion from Spain. But we have also reduced our portfolios there. What's more difficult is ship financing, which we intend to reduce from €19 billion to €14 billion by 2016. Here we anticipate for the current year that there will be an ongoing high level of risk provisioning.

SPIEGEL: That's hardly likely to reassure your shareholders, who have suffered creeping expropriation over the years. During your tenure in office, you have increased the number of Commerzbank shares nearly tenfold, and the share value has declined accordingly.

Blessing: The main setback was, of course, back in 2009. At the time, we received €18.2 billion from the state in the form of silent participations and shares. In 2011, we paid back the lion's share of this money earlier than planned. We intended in fact to pay back the rest from future profits. But during the course of the euro crisis we were hit by the Greek debt haircut, which cost us nearly €3 billion. After the stress test by the European Banking Authority (EBA), we had to further increase our capital reserves. We have managed to meet these new, higher capital requirements on our own. No one believed that we could do that.

SPIEGEL: Something else must have thrown a spanner in the works besides Greece. In 2009, you were talking about €4 billion in profits in 2012. But things turned out very differently.

Blessing: Correct, but why is that? The situation also looked very different from what everyone had predicted. Nevertheless, we wanted to be back in the black again by 2011 -- and we succeeded in doing so already in 2010. We set out to reduce our risk assets from €330 billion to €290 billion and came out with €210 billion. Furthermore, we have reduced operating expenses from €10 billion to €7 billion, which is more than what was planned.

SPIEGEL: And what went wrong?

Blessing: Income from interest and commissions have plummeted, primarily in the wake of the European sovereign debt crisis. The interest rate policies of the European Central Bank (ECB) have changed massively during the course of the euro crisis. To defuse the crisis, the ECB has significantly reduced interest rates. That was the right decision because it helped calm the markets. But this cuts into the profits of the banks.

SPIEGEL: As far as interest rates go, the situation is not likely to rapidly improve.

Blessing: Consequently, we have to do two things: Invest in future growth and reduce costs. That's why we have also begun to negotiate with the works councils about reducing the workforce.

SPIEGEL: The bottom line is that there have been only losers over the past four years: The shareholders have lost money, even the taxpayers are in the red with their bailout, and many employees have had to leave.

Blessing: After the government bailout, it was the job of management to pay back this money as quickly as possible. That was clear right from the start. Some shareholders might have preferred to keep this silent participation as long as possible, while in the eyes of certain taxpayers it couldn't go fast enough. The workforce would have rather kept more jobs, creditors wanted their interest payments and loan applicants wanted as much credit as possible. There was no solution that made everyone happy. Instead, we had to find a way of balancing these diverse interests. Not everyone is thrilled now. I can understand that.

SPIEGEL: Is it really possible to talk about a balancing of interests? You were extremely determined to get rid of the government shareholding.

Blessing: That is definitely the right approach! As management, we couldn't simply lean back and say: How nice that we permanently have the state on board.

SPIEGEL: Didn't your ego also play a role because you no longer wanted to be the state banker? Particularly as you only earned €500,000 a year in this role.

Blessing: No. The cap on wages was originally only intended for two years, but the supervisory board extended it for another two years, although there was no longer a legal obligation to do so from 2011. I also decided to forgo my bonus in 2012 because I didn't think it was appropriate for a CEO to receive a variable remuneration when there is practically no profit.

SPIEGEL: Even without the bonus, your salary has jumped to €1.2 million, and the remaining members of the board of directors even received large proportions of their bonuses. So one could indeed ask if it is appropriate.

Blessing: Operating earnings are, among other things, relevant to the bonus, and this model was approved by the shareholders in 2010. Our operating profit was over €1.2 billion in 2012.

SPIEGEL: Do you think it would be a good thing here in Germany if, as has recently been decided in Switzerland, shareholders decided on board members' salaries?

Blessing: In the spirit of strengthening the rights of owners, that would only be logical.

Legally Binding Limits on Management Pay 'A Bad Idea'

SPIEGEL: And what do you think about setting legally-binding upper limits for the managers of publicly-traded companies?

Blessing: I think it's a bad idea. If it's done, then it should be the shareholders who set the upper limits at their annual general meeting. After all, it's their company. I think it's wrong for lawmakers to do that.

SPIEGEL: Do you also think it's high-handed of the EU Commission to decide only to cap bankers' bonuses at 100 percent of their basic salary?

Blessing: That is something different than setting an upper limit to someone's overall salary. If remuneration has too many variables, the risks are distributed in an asymmetrical manner: If things go well, staff members earn exorbitant amounts. And if things go wrong, the company has to step in and take responsibility. This leads to high system risks which, if we are unlucky, mean that taxpayers have to step in and bail out the bank. Lawmakers want to prevent this -- and rightly so.

SPIEGEL: Depositors in Cyprus faced the unprecedented prospect of having to help foot the bill for bailing out their banks. Is this a model for the future?

Blessing: The case of Cyprus is special. This is practically the only place where the banking sector makes up such a large proportion of a country's economy. Furthermore, the equity capital of Cypriot banks had already been almost completely wiped out by the debt haircut in Greece, and they could only keep their heads above water thanks to refinancing by the ECB. Banks normally can sell bonds and use other financing instruments before they have to turn to savings deposits. The banks in Cyprus basically didn't have these options. That's why I think that such a situation won't be repeated in other countries.

SPIEGEL: Do you think it's essentially a good thing that banks have to save themselves first, in other words, that owners and creditors have to foot the bill?

Blessing: In principle, yes. The problem is simply that there has been no legal foundation in Europe for this. EU Commissioner for Internal Market and Services Michel Barnier now wants to introduce such legislation. That's a good thing because a bailout law makes it possible to limit the economic damage of restructuring or closing a bank.

SPIEGEL: Do you think the Greek debt haircut was a mistake?

Blessing: Conceptually speaking, it may have been right. But if ECB President Mario Draghi hadn't said that his central bank would purchase -- if necessary -- sovereign bonds without limit, the euro might have collapsed due to the Greek haircut.

SPIEGEL: But this hasn't reduced the massive debts. How are member states supposed to get them down again?

Blessing: There are many ways to reduce debts. The question is merely who should ultimately pay for this. With inflation, it's savers and life insurance customers. If income taxes are raised, wage earners suffer. Wealth taxes punish the wealthy, while value-added taxes hit consumers and a debt haircut bleeds investors. It always affects broad sections of the population, but to differing degrees and at different times. This distribution debate is currently being conducted. It is ultimately the politicians who will have to decide.