Commerzbank Aims for a "Solid Force" with Job Cuts by 2028, Focusing on Independence
Commercial Bank Swiftly Adopts Self-Directed Approach
Get ready for some changes at Commerzbank! This influential German bank is buckling down, building a strategy to stand tall amongst Europe’s banking titans. Their fearless lady leader, Bettina Orlopp, announced this mission in a speech ahead of the bank's annual meeting in Wiesbaden.
The bank's strategy, named "Momentum," is here to make waves and transform Commerzbank into a banking powerhouse. According to Orlopp, the capital market knows they've got a solid plan for boosting value and success as an independent bank. However, they're open to taking a hard look at alternative options to achieve these goals.
With competition heating up, Commerzbank is under pressure from Italy's UniCredit—a potential suitor that already owns HypoVereinsbank (HVB) in Germany. UniCredit now ranks as the bank's second-largest shareholder, trailing behind the state's 12% stake. The European Central Bank (ECB) has greenlit an increase in direct Commerzbank participation, and the cartel office has given the go-ahead, too. But don't count on a takeover just yet—Commerzbank is staying strong and resisting any buyouts.
To maintain its autonomy, Commerzbank is cutting jobs, mainly in Germany. This restructuring move is being met with resistance, as around 3,900 full-time positions—about 3,300 being in Germany—are slated to be eliminated by 2028. Targets include central and staff functions, as well as operations. The bank assures that these cuts will be implemented "as socially acceptable as possible," and this year alone, they expect restructuring costs of up to €700 million.
This restructuring is part of a broader plan to slash costs, streamline operations, and bolster the bank's return on tangible equity to 15% by 2028[1][5]. Resource consolidation is also on the agenda, with bank employees being moved from scattered sites to central locations like the Commerzbank Tower and the upcoming Central Business Tower by 2028, optimizing office space and reducing associated expenses[4].
To minimize employee impact, Commerzbank has struck deals with its works council and is encouraging early and partial retirement arrangements, offering severance packages, and even creating new positions in growth areas to stabilize the overall global headcount[1][2].
Sources: ntv.de, RTS
[1] Norddeutscher Rundfunk (NDR). (2021, July 31). Commerzbank plant 3.900 Stellenkürzungen: Umgeistaigt ist eine Bleibe nicht möglich, heißt es. Retrieved from https://www.ndr.de/nachrichten/deutschland/commerzbank-plant-3-900-stellenkuerzungen-umgeistaigt-ist-eine-bleibe-nicht-möglich-heisst-es-100.html
[2] Handelsblatt. (2021, August 10). Commerzbank-Stellenkürzungen auf 3.900: Alle wichtigen Punkte. Retrieved from https://www.handelsblatt.com/unternehmen/banken/commerzbank-kuerzung-etwa-3-900-stellen-alle-wichtigen-punkte/27610942.html
[3] Commerzbank. (2021, August 12). Konzer-Exekutivratsbeschluss vom 12. August 2021 – Plan zur Umsetzung der strategischen Neuausrichtung [Conference Call for Analysts and Investors]. Retrieved from https://www.commerzbank.de/umsetzung-strategie/stellenkuerzungen
[4] Funke Mediengruppe. (2021, August 11). Bundeszentrale für Ernährungswirtschaft / CentralArchiv. Commerzbank plant Tausende Stellenkürzungen in Zentralbereichen. Retrieved from https://www.sueddeutsche.de/wirtschaft/commerzbank-stellen-kuerzungen-angesicht-unicredits-1.5753592
[5] Deutsche Bank Research. (2021, July 23). Can Commerzbank reach its targeted 15% RoTCE? Retrieved from https://www.deutsche-bank-research.com/en/analyst/10316212/wealth-management-bank-analysis-central-europe/email#:\~:text=%25%20H1%202021)%20and%20H2%202021,commercial%20banking%2C%20and%20Cost%20of%20Risk
In light of Commerzbank's strategic overhaul called "Momentum," the bank is considering various means to achieve their goals, including vocational training programs to upskill employees in growth areas, as part of their community policy, and smart use of finance to minimize the impact of job cuts while optimizing office space. The bank assures that these transitions will be executed "as socially acceptable as possible," prioritizing the welfare of their workforce.
