More Trouble for Commerzbank

The financial woes for Germany's third-largest bank, Commerzbank, continued on Tuesday with news that it is planning to shed up to 3,000 jobs in the next two years.

A rise in bad loans and a writedown in the value of its equity investments mean that 300 jobs in the investment banking sector alone will be cut, bank chairman Klaus-Peter Müller confirmed at a Frankfurt press conference. There's even talk of closing down entire offices in New York, Singapore and Tokyo.

Looking ahead, Müller said prospects for next year were not entirely rosy: "We would be well-advised to formulate modest expectations for 2003 as well."

Reporting a pre-tax third-quarter loss of 133 million euros, Commerzbank joined two other major German players, Deutsche Bank and HypoVereinsbank, who both posted substantial losses in the third quarter.

Worst crisis in 50 years

In an interview with DW-WORLD, Commerzbank chief economist Peter Pietsch painted a bleak short and mid-term picture: "The situation is the worst the banking sector's been in in the last 50 years, and there's nothing on the horizon to make me confident of a recovery anytime soon," he said.

Although he dismissed recent rumors that Commerzbank was facing a liquidity crisis making it a potential takeover target, he acknowledged that the bank needed a fundamental restructuring: "The objective has to be to save, save and save again and as painful as it may be, that means cutting personnel costs too."

Pietsch added that there was little chance of the overall economic climate improving over the next year. "I can't see the economy picking up enough to bring about a marked improvement," he said.