Commerzbank, Germany’s second-largest lender, has announced plans to cut 3,900 full-time positions by 2028, with the majority of the cuts expected to occur in its home country. The bank also revealed new strategic targets, including increases in staffing in select international locations to maintain a global headcount of 36,700.
CEO Bettina Orlopp emphasized the importance of conducting the job cuts in a socially responsible manner, ensuring that morale remains high within the organization. The restructuring is expected to result in around 700 million euros in before-tax costs in 2025, with a net result target of 2.4 billion euros for the year. The bank also aims to achieve a payout ratio of over 100% over the 2025-2028 period, after accounting for restructuring costs and Additional Tier 1 bond coupons.
In addition to the job cuts, Commerzbank has raised its revenue goals to 3.8 billion euros in 2027 and is targeting a higher return on tangible equity rate of 13.6% for the year. The bank had previously announced record annual performance, with net profit increasing by 20% to 2.68 billion euros in 2024. Plans to repurchase shares and increase dividend payouts were also outlined.
Analysts at Deutsche Bank have praised Commerzbank’s new targets and the linear progress towards achieving them. The bank’s shares have risen by 21.8% year to date, reflecting investor confidence in the strategic direction set by the management team.
Commerzbank has been in the spotlight since UniCredit, a major shareholder with a 9.5% direct stake and an 18.5% stake through derivatives, raised speculation about a potential cross-border takeover. The German government has expressed reservations about such a move, with Finance Minister Jörg Kukies criticizing UniCredit’s aggressive bid.
CEO Andrea Orcel of UniCredit has hinted at the possibility of a merger with Commerzbank, prompting discussions between the two banks. Orlopp described UniCredit as an activist investor and expressed openness to further dialogue regarding potential collaboration.
Overall, Commerzbank’s strategic update and restructuring plans signal a shift towards greater efficiency and profitability. The bank’s focus on sustainable growth and shareholder value creation will be crucial in navigating the evolving financial landscape in Europe.
