Commerzbank is contemplating the potential dismissal of as many as 4,000 employees.
Commerzbank is shaking things up, with plans to trim its workforce by several thousand to demonstrate its independence and reduce costs. Insiders are tight-lipped about the exact number of job cuts, with estimates ranging from 3,000 to 4,000 out of a total workforce of around 42,000. The Frankfurt-based bank is working on a strategy to highlight its value potential, aiming to prove it can survive as an independent institution in the long term.
The supervisory board will delve into these measures during a full-day meeting with management before officially presenting the strategy on Thursday. However, sources say the planned changes are more evolutionary than revolutionary, avoiding a drastic shift in course. The management, led by CEO Bettina Orlopp, has been in the trenches for months, crafting a strategy to showcase Commerzbank's worth.
Despite the bank's efforts, Unicredit's overtures haven't gone unnoticed. Last year, Unicredit CEO Andrea Orcel stirred the pot when the Italian bank acquired a larger stake in Commerzbank and expressed interest in a takeover. Commerzbank, which is partially state-owned, deemed these advances hostile, and the works council fears massive job losses if the merger were to occur.
Commerzbank is considering smaller, targeted acquisitions instead of pursuing larger takeovers, which is the trend in Spain and Italy. This strategic shift follows a stronger-than-expected annual result, with Commerzbank's net profit climbing by 20% in 2024. The current strategy program runs until 2027, and the bank refined some financial targets last September, shortly after Unicredit expressed interest.
The job cuts, expected to send hundreds of employees into early retirement and enhance efficiency through technology, are being executed thoughtfully to avoid causing unrest among employees. Commerzbank's willingness to make limited cuts now prevents even more drastic cuts under a potential Unicredit merger.
Political opposition to a potential Unicredit takeover is fierce in Germany. Boris Rhein, the premier of Hesse, said, "Hostile takeovers are not welcome here. No one wants what you are doing. Withdraw!" Despite this, at least one major investor and several economic representatives see potential for negotiations.
[1] Enrichment Data: Commerzbank's plans to cut thousands of jobs are part of its strategy to assert its independence against UniCredit's takeover attempts. The bank aims to demonstrate its value potential to investors and show it can thrive independently. The supervisory board is discussing cost cuts and new goals with management, with the strategy update to be presented to the public on Thursday. Job cuts are being implemented with care to avoid unrest among employees and to show its willingness to accept limited cuts to avoid more severe cuts under UniCredit. The bank is also exploring the possibility of pursuing smaller bolt-on acquisitions rather than major deals, in contrast to larger deals being considered in other European markets. The political establishment in Germany, including the premier of Hesse, Boris Rhein, has expressed strong opposition to a potential takeover by UniCredit, urging the Italian bank to withdraw its bid. Despite this, some investors and economic representatives see potential for negotiations. The opposition to a hostile takeover is strong in Germany, with officials emphasizing that no one wants such a move.
The economy-related implications of Commerzbank's job cuts are part of its strategy to assert its independence against UniCredit's takeover attempts. By reducing costs and demonstrating its value potential, the bank aims to show investors that it can thrive independently.
The planned job cuts are part of Commerzbank's strategy to strengthen its financial position and avoid the need for more drastic cuts under a potential UniCredit merger, thereby maintaining the overall health of the German economy.
