Germany’s second-largest lender Commerzbank on Thursday announced it will eliminate 3,900 full-time positions by 2028, largely in its native Germany, as it unveiled a spate of new strategic targets.
The job cuts will be accompanied by increases in staffing in “selected areas” such as in international locations, resulting in a broadly constant global headcount of 36,700, the bank said in its strategic update.
Commerzbank CEO Bettina Orlopp told CNBC’s Annette Weisbach after the news that it was important the job cuts were done in a “very social, responsible way.” She added that she believes the reductions can take place “without weakening the morale, which is actually really, really good.”
The lender anticipates around 700 million euros ($730.7 million) of before-tax restructuring costs in 2025, targeting a net result of 2.4 billion euros after these charges for the year. It plans a payout ratio of more than 100% over the 2025-2028 period, after the deduction of restructuring costs and Additional Tier 1 (AT 1) bond coupons.
The bank also raised its longer-term revenue goals to 3.8 billion euros in 2027, up from a previous forecast of 3.6 billion euros, and said it is now targeting a higher return of tangible equity rate — a profitability metric — of 13.6% in the year, from 12.3% previously.
Commerzbank had disclosed its “record” annual performance two weeks before the scheduled release of its financial results, in a bid to fall in step with German legal requirements when a company’s capital return significantly exceeds the expectations of capital markets.
At the time, it said net profit hiked by 20% to a forecast-beating 2.68 billion euros ($2.78 billion) in 2024, outlining plans to repurchase 400 million euros of shares and boost its dividend payout to 0.65 euros per share, compared with 0.35 euros per share in the previous year. Full-year revenue in 2024 came in at 11.1 billion euros, compared with 10.461 billion euros in 2023, the bank said Thursday.
“We have delivered, consequently, over the past four years, what we have promised, and we intend to do that also in the coming years,” Orlopp said Thursday.
Deutsche Bank analysts said the “relatively linear” planned progress to Commerzbank’s new mid-term target is a “positive,” noting the spate of “bullish new targets.”
Commerzbank shares are up 21.8% year to date and ended the day 1.6% higher.
‘Activist investor’
Commerzbank has been advocating its case to stand alone since last year’s surprise build of a stake by UniCredit fueled market talk that Italy’s second-largest lender could be on the hunt for a cross-border takeover. UniCredit currently holds a direct 9.5% stake and a 18.5% stake via derivatives in Commerzbank.
The German government has opposed the prospect of such a cross-border consolidation, with Finance Minister Jörg Kukies slamming UniCredit’s “very aggressive, very opaque” bid in a CNBC interview in January.
Split between the German overture and a takeover offer for Italian lender
Read More: Commerzbank earnings Q4 2024
