Commerzbank aims to cut jobs, branches after Deutsche merger fails
Reuters
Published Sep 20, 2019 10:59AM ET
Commerzbank aims to cut jobs, branches after Deutsche merger fails
By Tom Sims
FRANKFURT (Reuters) - Commerzbank (DE:CBKG) said on Friday it wanted to shed thousands of staff and close a fifth of its branches in a strategy overhaul, after the German lender's attempt to merge with Deutsche Bank (DE:DBKGn) failed.
The bank, partly owned by the German government after a bailout and struggling to generate profits, also aims to sell a stake in its Polish subsidiary mBank and absorb its Comdirect online brokerage unit.
Commerzbank said the strategy plan would involve investment of 1.6 billion euros ($1.8 billion), with 750 million euros going into new technology and the rest earmarked for restructuring.
The bank said the draft measures would be discussed at a meeting of the supervisory board on Sept. 25 and 26. It said no final decision had yet been taken.
Shares in Commerzbank, which has been reviewing strategy in recent weeks, were 0.8% higher in late afternoon trade, with some investors saying the measures were not enough.
Klaus Nieding, vice president of shareholder lobby group DSW, said the bank needed to do more than cut costs. "The big question remains how the bank wants to make money in the future," he said.
The bank was ejected from the blue-chip DAX index last year, highlighting the challenge facing banks in Europe's biggest economy since the global financial crisis.
The bank said it would cut 4,300 jobs in some places but add 2,000 jobs in "strategic areas", so the group headcount would fall in total by about 2,300 full-time positions, equivalent to about 5.7% of its workforce. It now employs about 40,700 people.
The sale of mBank would reduce its staff by a further 6,600.
It also aims to trim the number of branches by 200 to about 800.
The sale of its 69.3% stake in mBank has a market value of more than 2 billion euros ($2.2 billion). Commerzbank said the proceeds would enable "a faster implementation of its strategy and the associated investments".
The bank, which owns 82% of Comdirect, foresees offering a 25% premium for shares it doesn't hold. Comdirect shares jumped 26%.
Germany's banks have been battling a legacy of bad debts, bloated headcounts and fines a decade after the global financial crash. Commerzbank has already been reducing staff and is trying to cut back-office work to restore profitability.
Get The News You Want
Written By: Reuters
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.