Commerzbank to cut jobs in order to stop sharp drop in profitability
(21 September 2019 – Europe) Commerzbank is set to cut a further 2,300 jobs and close 200 branches across Germany as it seeks to halt a sharp decline in profitability by slashing €600 million of costs.
The German lender also announced the sale of a 69 percent stake in Poland’s mBank to help fund the strategic overhaul.
“A further group-wide headcount reduction is regrettable but inevitable . . . the aim will be to implement [it] in as socially responsible a way as possible,” the Frankfurt-based bank said.
Around 4,300 full-time positions will be cut and 2,000 jobs added in “strategic areas”. After the reductions it will be left with around 46,500 employees and 800 branches.
Commerzbank has been struggling to arrest declines in revenue and profitability in Germany’s ultra-competitive financial sector in the past few years. It now faces the additional headwinds of its home economy slipping into recession and the European Central Bank cutting interest rates further into negative territory for the foreseeable future.
Restructuring charges for closing branches and axing staff will reach €850 million, while €750 million will be spent on upgrading the bank’s IT platforms and digitisation, bringing the total cost of the plan to €1.6 billion. Commerzbank said it would attempt to win more business from the Mittelstand, the small-and-medium sized companies that are the backbone of the German economy.