Commerzbank aims to cut jobs, branches

22 September, 2019 12:00 AM printer

FRANKFURT: Commerzbank 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 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, report agencies.

Commerzbank said the strategy plan would involve investment of 1.6 billion euros (US$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 0.8per cent 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 5.7per cent 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 69.3per cent stake in mBank has a market value of more than 2 billion euros (US$2.2 billion). Commerzbank said the proceeds would enable “a faster implementation of its strategy and the associated investments”.

The bank, which owns 82per cent of Comdirect, foresees offering a 25per cent premium for shares it doesn’t hold. Comdirect shares jumped 26per cent.