Commerzbank Announces Reduction of 3,900 Full-Time Positions, Majority in Germany

In a significant restructuring move, Commerzbank has announced plans to eliminate approximately 3,900 full-time positions by the end of 2027, with a substantial portion of these cuts occurring in Germany. This decision comes amid increasing pressure from a potential hostile takeover bid by Italian banking giant Unicredit.

The DAX-listed bank confirmed that out of the total job reductions, 3,300 positions will be cut in Germany, primarily affecting its headquarters and additional locations in Frankfurt. The areas most impacted will include administrative and support functions, as the bank aims to streamline operations in response to competitive pressures.

Despite the layoffs, Commerzbank has indicated that it plans to maintain a stable overall workforce of around 36,700 full-time employees globally. New job opportunities are expected to arise in other sectors of the bank, including the Polish mBank subsidiary and various Asian locations. The bank is utilizing demographic changes and natural staff turnover to manage the transition in a socially responsible manner. To facilitate this, it has already reached preliminary agreements with employee representatives on a phased retirement program set to begin this year.

The backdrop to these cuts is the increasing influence of Unicredit, which has been acquiring shares in Commerzbank since the German government reduced its stake in the bank last autumn. Presently, Unicredit holds approximately 28 percent of Commerzbank's shares, with around 9.5 percent acquired directly through stock purchases and the remainder through financial instruments. Unicredit's CEO, Andrea Orcel, has expressed interest in a potential takeover, but no formal offer has been presented. Legally, Unicredit would be required to make an offer to Commerzbank shareholders only if its stake surpasses 30 percent.

Commerzbank's management and employee representatives are contending against what they perceive as Unicredit's aggressive acquisition strategy, which they view as a threat to the bank's independence. This sentiment is echoed by various political figures in Germany, particularly given the federal government's historic investment in Commerzbank during the 2008 financial crisis, where taxpayer funds were utilized to stabilize the institution.

Under the leadership of CEO Bettina Orlopp, who took the helm on October 1, Commerzbank is pursuing ambitious targets to enhance profitability and secure its future as an independent entity. The bank aims to significantly boost its profits, setting a goal to increase its net income from approximately EUR2.7 billion in the previous year to EUR4.2 billion by 2028. However, due to the costs associated with the job cuts, the bank anticipates a decline in profits to around EUR2.4 billion for the current fiscal year, incurring an estimated EUR700 million in restructuring expenses.

For shareholders, Commerzbank's board has promised substantial dividend payouts, targeting over 100 percent of its profits for distribution in 2025, with plans for a 100 percent payout ratio from 2026 to 2028, contingent on strategic execution and market conditions. To achieve these financial objectives, the bank plans to reduce its operational costs while simultaneously increasing revenue, particularly from service fees and commissions. Commerzbank aims to lower its cost-to-income ratio from 59 percent last year to approximately 50 percent by 2028, with a target of around 57 percent for 2025.

As the situation unfolds, stakeholders will be closely monitoring how Commerzbank navigates these challenging dynamics while striving to maintain its position in a competitive banking landscape.