Commerzbank Announces Job Cuts Amid Strategic Shift
On Thursday, Commerzbank revealed plans to reduce its workforce by 3,900 full-time positions by 2028 as part of a comprehensive strategy aimed at enhancing its financial stability. Despite the layoffs, the bank assured that it will hire in other “selected areas,” ensuring that the total number of full-time employees remains steady at 36,700. The majority of the job cuts will primarily impact staff based in Germany, while recruitment efforts will focus on locations with lower operational costs.
This announcement was part of a financial update following the bank’s recent release of its full-year earnings report two weeks prior. Notably, Commerzbank achieved a record net profit of €2.68 billion in 2024, marking an impressive annual increase of approximately 20%. Revenues also saw a healthy boost, rising by 6% to reach €11.11 billion, bolstered by a 7% increase in net commission income, which climbed to €3.64 billion. Additionally, net interest income remained robust throughout the year.
The announcement of layoffs comes at a critical time as Commerzbank seeks to safeguard itself against a hostile takeover attempt by Italian lender UniCredit. Through complex financial instruments including derivatives, UniCredit has amassed a 28% stake in the German bank, although Commerzbank’s management firmly opposes any full-scale takeover. There are significant concerns among German banking officials and politicians regarding the potential impact of a merger, particularly the risk of job losses and a detrimental effect on lending to small and medium-sized enterprises.
Chancellor Olaf Scholz, at the end of last year, expressed his disapproval of aggressive acquisition tactics, stating, “to aggressively acquire stakes in companies without any cooperation, without any consultation, without any feedback” is unacceptable. Andrea Orcel, CEO of UniCredit, indicated on Tuesday that a formal takeover bid would be forthcoming once Germany forms a new government following elections at the end of this month.
If Commerzbank can fortify its business outlook prior to this development, it may find it easier to resist a takeover attempt. The bank outlined ambitious goals in its latest update, aiming for a net profit of €4.2 billion by 2028 and targeting a return on tangible equity of 15%. Furthermore, Commerzbank expects its cost-income ratio to improve to around 50% in 2028, compared to the 59% ratio recorded last year.
Looking ahead to 2025, Commerzbank anticipates a profit decline to €2.4 billion, primarily due to restructuring costs projected at €700 million. Nevertheless, the bank is committed to enhancing dividends and shareholder returns, proposing a dividend of €0.65 per share based on 2024 earnings, a noticeable increase from €0.35 the previous year. The bank also plans to maintain a payout ratio exceeding 100% during the period from 2025 to 2028, after accounting for restructuring expenses and Additional Tier 1 (AT1) bond coupons.
In a separate announcement on Thursday, Commerzbank introduced a strategic partnership with Visa. This collaboration will enable Commerzbank customers to primarily receive Visa debit and credit cards, facilitating a smoother shopping experience both online and internationally.
