Commerzbank announces massive job cuts

Commerzbank said Thursday it would cut the number of the bank's full-time employees by about 9,600, while at the same time creating 2,300 new jobs over the next four years. That would mean a net decline of some 7,300 jobs.

The bank said the plans, which were expected to be approved by its board on Friday, would reduce its full-time workforce from about 45,000 to 38,000.

At the same time, the bank announced a suspension of its dividend payments "for the time being."

The moves are part of a 1.1-billion-euro ($1.2-billion) restructuring plan, which the lender hopes will allow it to face off competition and boost its profitability. 

Board members aim to achieve "sustainable profitability" by focusing on private and business banking customers while shrinking investment banking activities, the bank said in a statement.

Martin Zielke, who took over as head of Commerzbank in May, is aiming to boost the lender's profitability by the end of 2020.

However, the Frankfurt-based bank warned that the restructuring plan will result in the lender writing off around 700 million euros in the three months to the end of September, leading to a third-quarter net loss.

Turbulent times

Under Zielke's new strategy, the bank's key Mittelstand division, which handles mid-sized business accounts, will be merged with its corporate branch. Furthermore, there will be increased emphasis on digitization and automation of the bank's activities.

Commerzbank has been struggling to cope with the impact of stricter regulations in the wake of the global financial crisis. In addition, the protracted period of low interests has eaten into the bank's profits.

The bank's announcement on Thursday comes amid turbulent times for the bank's bigger rival Deutsche Bank, which is Germany's biggest bank. Deutsche is itself going through a painful restructuring that will see it slash almost 9,000 jobs worldwide and 200 branches in home market Germany.

Deutsche is also facing around 8,000 legal cases worldwide including a $14-billion demand from the US Department of Justice over its activities leading up to the subprime mortgage crisis.

Deutsche shares have been on a roller-coaster ride this week amid speculation about the future of the lender, with Deutsche chief John Cryan forced to deny media reports that he asked the German government for a bailout to meet a slew of costly legal bills.

sri/hg (dpa, AP, AFP)