Commerzbank is set to undergo significant restructuring as it faces mounting pressure from Italian bank UniCredit, leading to the eradication of approximately 3,900 jobs by 2027. This drastic decision, confirmed by the Frankfurt-based bank, is primarily aimed at enhancing efficiency and maintaining independence, amid growing concerns about UniCredit's increasing influence.
According to Commerzbank, the vast majority of the job cuts—about 3,300—will occur within Germany, particularly affecting key positions at its headquarters and back-office operations based in Frankfurt. While acknowledging the potential hardship these changes pose, CEO Bettina Orlopp emphasizes the necessity of these measures for the bank's competitive positioning.
Orlopp explained, "Um diesen Transformationsprozess sozialverträglich zu gestalten, setzt die Commerzbank vor allem auf den demografischen Wandel und die natürliche Fluktuation," which translates to the bank prioritizing demographic change and natural employee turnover to manage the transformation process socially responsibly. This approach aims to minimize disruption and help those affected transition smoothly.
The upcoming job reductions come at a time when Commerzbank seeks to bolster its financial standing by driving its profit upwards. Currently, the bank has reported figures showing it earned nearly 2.7 billion euros last year, and the goal is to increase its profit to approximately 4.2 billion euros by 2028. Nonetheless, initial costs associated with the job cuts mean the projected profit for this year may drop to about 2.4 billion euros.
Through this restructuring, Commerzbank intends not only to cut jobs but also to expand its workforce elsewhere, including international markets like Poland and select operations throughout Asia, potentially balancing its total employee count to about 36,700 globally.
Despite formidable challenges from UniCredit, which has acquired more than 28% of Commerzbank's shares, Orlopp and the bank's management assert their commitment to independence. During her tenure, she has laid out ambitious mid-term goals, aiming for significant growth alongside cost reductions. Orlopp remarked, "Wir setzen voll auf unsere Stärken. Wir sind die Nummer eins im Mittelstand und die führende Bank im deutschen Außenhandel," declaring Commerzbank's strength and intent to leverage existing market positions.
This strategy is not only about shedding roles but also about enhancing long-term profitability for stockholders. The board has latest plans to return over 100% of the net profit to shareholders by 2025. Orlopp's outlook for the coming years suggests shareholder friendly distributions will be directly tied to the successful implementation of their strategy and economic conditions.
Overall, the moves by Commerzbank represent both a reaction to immediate external pressures and efforts to secure its market position for the future. While some analysts criticize the reduction of staff as indicative of broader challenges facing Germany's banking sector, Orlopp insists the institution is on the right track, highlighting their substantial progress over the past four years.
She noted: "Die Commerzbank hat in den vergangenen vier Jahren in jeder Hinsicht große Fortschritte gemacht," which translates to the bank has made significant advancements across all areas over the past four years. This assertion serves as both reassurance to stakeholders and as a framework within which to gauge the effectiveness of Commerzbank's transformative actions.
The pathway forward may not be easy, but Commerzbank appears determined to navigate these transitional times with both prudence and clarity of vision, aiming to reaffirm its standing as Germany's second-largest bank and effectively deflect potential takeover tides from abroad.