Commerzbank to cut up to 6,000 jobs by 2016

, Bloomberg

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Martin Blessing
Martin Blessing

Commerzbank, Germany's second- biggest bank, will cut 4,000 to 6,000 jobs over the next four years to reduce costs and meet its profit goals.

The job reductions will apply to all units worldwide with the retail bank having "significant overcapacity," according to an internal memo obtained by Bloomberg news, the contents of which were confirmed by spokesman Simon Steiner in Frankfurt. Chief executive officer Martin Blessing declined to comment on the cuts at the World Economic Forum in Davos, Switzerland.

"If we want to reach our profit and growth targets amid a continuous difficult environment, we need to adjust the staff structure," Ulrich Sieber, management board member responsible for human resources, said in the memo.

Commerzbank, which got a state bailout of $24 billion in 2008, has been criticized for failing to provide a convincing strategy to cut costs and widen margins in consumer banking as it offloads sovereign debt and exits shipping and property. Like other European banks, higher capital requirements and the debt crisis are forcing it to reorganize. Allianz, Europe's biggest insurer, said Thursday that it was closing down German unit Allianz Bank with the loss of 450 jobs.

Union Objects

Commerzbank will start talks with labor representatives on the reductions next month, according to the memo.

Labor union Ver.di said the company told them the consumer banking unit was overmanned by 30 percent, or 3,400 full time staff, of which 1,800 should be cut in the short term. The union said it will fight the lay offs, according to an emailed statement Thursday. Commerzbank will also outsource 600 positions as part of the plan, it said.

"The job cuts are an important step for Commerzbank to reach their cost-saving targets," Philipp Haessler, an analyst at Equinet AG in Frankfurt, who recommends buying the shares, said by telephone. "But it is only a part of the new strategy. The even more important part still needs to come. The bank should make clear how it'll boost revenue at the retail bank."

Profit margins in consumer banking have declined after the debt crisis prompted central banks to slash interest rates to near zero.

Commerzbank had 56,287 staff in September, according to its third-quarter earnings statement.

Outsourcing Plans

Forced staff losses will be a last resort, the bank said in the memo. The firm will outsource some services to cheaper locations. Job cuts won't apply to online banking unit comdirect and Bre Bank of Poland, according to the document.

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