Commerzbank unveils deeper job cuts in new restructuring round

Published : 21 Sep 2019 06:26 PM | Updated : 02 Sep 2020 01:27 PM

Germany’s second-largest lender Commerzbank said Friday it plans to cut the equivalent of 4,300 full- time posts, one-tenth of its workforce, and shutter 200 branches in a fresh bout of restructuring, reports BSS/AFP.

The move comes after years of struggle and a bid to merge with crosstown rival Deutsche Bank that fell through in April, as well as a programme of over 9,000 job cuts over four years launched in 2016.

Bosses see the cutbacks as a part of Commerzbank’s broader strategy of refocusing on home market Germany, where the state remains a shareholder to the tune of 15 percent — the legacy of a financial crisis-era rescue package.

As well as the geographical shift, they are looking to massively improve the lender’s digital presence and build up its market share among retail customers and small- to medium-size firms.

Commerzbank says that transition will see some 2,000 new hires come aboard in “strategic areas”, partially offsetting the job cuts.

Meanwhile the branch closures will shrink its domestic network to around 800 locations.

“With its new strategic programme, Commerzbank is enhancing the long-term sustainability of its business,” the Frankfurt-based firm said.

It added that it would work out details with employee representatives to make the process “as socially responsible as possible”.

On top of the job cuts, the lender also aims to sell its majority stake in Poland’s mBank to bring in some of the cash needed for its plans.

And it will buy out the remaining third-party shareholders in subsidiary Comdirect, of which it already owns 82 percent.

Like other major European banks, Commerzbank has gone through successive rounds of restructuring.

The sector is struggling with overcapacity, low interest rates, harsher regulations brought in since the financial crisis and difficult conditions on some markets including shipping.

In recent months, Deutsche Bank has announced 18,000 job cuts, HSBC 4,000, and France’s Societe Generale 1,600.

On Commerzbank’s side, its restructuring plan is set to cost around 1.6 billion euros ($1.8 billion) up front if signed off by the supervisory board next week.

The bank with the yellow triangle logo says if it goes ahead, costs could fall by 600 million euros per year by 2023.

Lower outgoings would bring its return on tangible equity — a key measure of bank profitability — to “more than four percent in the medium term”.

That figure is below its previously expressed aim of between five and six percent by 2020, but above the three percent it managed in the first half of this year.