29 Sept,FRANKFURT – Germany’s second largest lender Commerzbank said on Thursday it plans to cut 9,600 jobs by 2020 and withhold dividends to pay for a 1.1-billion-euro restructuring.
The Frankfurt-based firm added that the $1.23-billion plan, still to be agreed at a supervisory board meeting on Friday, would see it report a loss in the third quarter as it writes down the value of goodwill and other intangible assets.
But it forecasts a “slightly positive” bottom line for the whole of 2016, it went on.
Like other German banks, Commerzbank is fighting headwinds from low interest rates in the eurozone, tough regulation, intense competition, and the arrival of new digital actors on the market.Board members aim to achieve “sustainable profitability” by focusing on private and business banking customers while shrinking investment banking activities, it said in a statement.
“Profit volatility and risks from regulatory changes will be reduced and capital freed up for the core business” with the retreat from investment banking, the statement continued.
To cover the costs of the restructuring, the bank said it would “cease dividend payments for the time being”.It would be the first time the bank has not paid a dividend since the 2008 financial crisis.
Commerzbank’s employee roster would shrink by around one-fifth from its current 51,300 if the plan is put into action.
Managers predict that the restructuring will create savings of 6.5 billion euros per year and allow them to create 2,300 new jobs at the bank.The German state remains a shareholder in Commerzbank to the tune of 15 percent after coming to the lender’s rescue in 2008.(AFP)