German banking sector accuses the cost of the health crisis. According to the press from across the Rhine, the second bank in the country could cut a total of 11,000 jobs by 2023. The group’s management plans to propose Wednesday to the supervisory board a strategy providing for 7,000 new job cuts of the 4,000 announced last fall, writes the financial newspaper “Börsen-Zeitung”.
In addition, Commerzbank could cut up to 400 branches out of the thousand it manages in Germany. In other words twice as much as previously envisaged by management, says the daily.
The bank’s communication indicated that the supervisory board had not yet decided on any strategic review. However, according to a union representative quoted by hooly-news.com, this new strategy could well be presented in August.
Cerberus, the demanding American
This shift could be partly the result of pressure from the American fund Cerberus, which took a 5% stake in the German banking group in 2017. In early June, the American activist – a fervent supporter of the failed merger with Deutsche Bank, in which it is also a shareholder – has been particularly offensive against Commerzank.
In a letter, the fund claimed two seats on the supervisory board, highlighting the group’s “disastrous” performance: since joining the capital, Commerzbank has lost 60% of its market value. The bank, which “took note” of the letter as well as the “critics”, however, refused Cerberus’ request. However, the activism of the fund will probably have pushed the management of the bank to shift into high gear.
In early May, during the presentation of its quarterly results, the bank had already found itself under fire from criticism from its shareholders. The latter highlighted the lack of results of the third restructuring plan launched last September, including providing for 4,000 job cuts.
The bank was hit hard by the covid-19 crisis, which could accelerate the transformation process . It announced a loss of 295 million euros in the first quarter, in particular due to the quadrupling of its provisions for risk, to 326 million euros. The bank was forced to forgo paying dividends, much to the dismay of German taxpayers: the state is still a 15.6% shareholder of Commerzbank since its rescue in 2009.