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| Commerzbank to axe nearly 10,000 jobs | Commerzbank to axe nearly 10,000 jobs |
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| Commerzbank is to cut nearly 10,000 jobs and suspend its dividend as part of a wide-ranging restructuring plan. | Commerzbank is to cut nearly 10,000 jobs and suspend its dividend as part of a wide-ranging restructuring plan. |
| Germany’s second biggest lender after Deutsche Bank said on Thursday it expected restructuring costs of €1.1bn (£948m) as it combined business operations and cut costs to offset the impact of low loan demand and negative European Central Bank interest rates amid a shift to digital banking. | Germany’s second biggest lender after Deutsche Bank said on Thursday it expected restructuring costs of €1.1bn (£948m) as it combined business operations and cut costs to offset the impact of low loan demand and negative European Central Bank interest rates amid a shift to digital banking. |
| The revamp will come at a heavy cost for staff as Commerzbank slashes 9,600 of its 45,000 full-time positions – almost one in five jobs. The move is a more drastic reduction than at Deutsche Bank, which is axing about 10% of staff but suggests deeper cuts may be needed. | The revamp will come at a heavy cost for staff as Commerzbank slashes 9,600 of its 45,000 full-time positions – almost one in five jobs. The move is a more drastic reduction than at Deutsche Bank, which is axing about 10% of staff but suggests deeper cuts may be needed. |
| Commerzbank plans to merge medium-sized German firms with its corporate and markets operations, while also scaling back trading activities in investment banking. | |
| That move is expected to prompt a writedown of about €700m in the third quarter, leading to a quarterly net loss. Commerzbank expects to turn a small net profit in full-year 2016, down from €1.1bn last year. | That move is expected to prompt a writedown of about €700m in the third quarter, leading to a quarterly net loss. Commerzbank expects to turn a small net profit in full-year 2016, down from €1.1bn last year. |
| The bank will concentrate on two customer segments in future: private and small business customers and corporate clients, with the restructuring expected to lift net return on tangible equity to at least 6% by the end of 2020 from 4.2% last year. | The bank will concentrate on two customer segments in future: private and small business customers and corporate clients, with the restructuring expected to lift net return on tangible equity to at least 6% by the end of 2020 from 4.2% last year. |
| Commerzbank aims to add 2,300 jobs in areas where business was growing, which would ease the net reduction to 7,300. | Commerzbank aims to add 2,300 jobs in areas where business was growing, which would ease the net reduction to 7,300. |
| Market reaction to the announcement – parts of which had been reported by media in recent days – was muted, with Commerzbank’s shares trading 1.7% lower at €5.89 at lunchtime on Thursday, lagging a 0.9% rise in the Stoxx Europe 600 banking index. | |
| Commerzbank’s shares have fallen by nearly 40% since the start of the year, compared with a 24% drop in the banking index. | |
| The bank’s supervisory board was reviewing the plans in a meeting on Wednesday and again on Thursday. Employee representatives have said they would resist job cuts. | |
| Bankhaus Lampe analyst Neil Smith said the staff cuts were large but Commerzbank’s target of reducing its annual cost base to €6.5bn by 2020, from €7.bn last year, fell short of his expectations. | |
| Smith said he had also hoped Commerzbank would make faster progress on winding down its exposure to the troubled ship financing sector. “If they were able to exit shipping quickly and at not too big a cost, they might be able to restore the dividend rapidly afterwards,” he said. | |
| Commerzbank said it would cease dividend payments for the time being to cover restructuring costs. | |
| One of the bank’s top 10 shareholders said the drastic cost-cutting would be hard for employees but was unavoidable to make the bank more efficient. | |
| “I assume Commerzbank won’t pay a dividend before 2020, and that is terrible,” said the investor, who declined to be named. | |
| Germany’s finance ministry declined to comment. | |
| Berlin holds a stake of more than 15% in Commerzbank, a legacy of its €18bn bailout of the lender in the financial crisis. |