Commerzbank plans to cut 9,600 jobs

16:13 • 29.09.16
Economy

Germany's second-biggest lender, Commerzbank, is planning to cut 9,600 jobs over the next four years and cease dividend payments for the first time.

In a statement, the bank said by the end of 2020 it would have "sustainably increased its profitability".

However, the bank also said it aimed to create 2,300 new posts in areas where its business was growing.

Commerzbank's strategy for achieving this will be debated by the bank's board on Friday.

Last year, the bank had about 51,300 employees.

The announcement comes amid denials that the German government is working on a rescue plan for Deutsche Bank.

Deutsche Bank, the country's biggest bank, is facing a $14bn (£10.8bn; €12.5bn) fine in the US for mis-selling mortgage-backed bonds before the financial crisis of 2008.

Commerzbank's strategy will see it concentrating on its "core" businesses of "private and small business customers" and "corporate clients" and digitising some processes.

As part of the €1.1bn (£948m) restructure, it plans to merge its "Mittelstandsbank," which deals with medium-sized German firms, with its corporates and markets division. As a result, it will "probably" have to write off about €700m in the third quarter of 2016.

It also intends to "scale back" its trading activities in investment banking.

The bank said that would "reduce earnings volatility and regulatory risk and will free up capital to be invest in core client businesses".

Despite the write-offs and higher loan loss provisions because of the weakness in the shipping markets, Commerzbank said it still expected to make a small net profit for 2016 as a whole.

It said it would begin talks shortly with employee representatives about the job cuts, which are expected to amount to a loss of 7,300 full-time positions, once the creation of 2,300 new jobs is taken into account.

Commerzbank's shares fell by 2.22% on Thursday.

 

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