Germany’s Commerzbank on Thursday said it was preparing staff cuts in its efforts to fend off tie-up advances by Italian banking group, UniCredit.
Commerzbank has been advocating its case to stand alone as an independent company, with the bank warning that a merger could lead to significant job losses.
What are the plans?
The financial institution said the cuts would be implemented by 2028, with a reduction of about 10% of its workforce — some 3,900 — by that time.
The new strategy was announced on Thursday after a meeting of the bank’s supervisory board.
Commerzbank said the cuts, which would mainly affect sites in Germany, would come as the bank makes “efficiency gains” from digitalization and increased use of overseas sites.
It also increased its financial targets, aiming for a net profit of €4.2 billion euros by 2028, up from about €2.7 billion last year.
For months, Commerzbank’s management, under the leadership of CEO Bettina Orlopp, has been working to update the strategy to reveal the “significant value potential” of Germany’s second-largest bank.
Why has UniCredit bought a stake in Commerzbank?
UniCredit announced last year it had increased its stake in Commerzbank to around 21% after it acquired a 9% stake. The Milan-based bank also announced it had requested the European Central Bank’s permission to raise its stake to 29.9% — just short of the 30% threshold that would require it to make a public offer for the entire bank.
German Chancellor Olaf Scholz has previously described UniCredit’s stake buildup and a potential takeover as an “unfriendly” and “hostile” attack. Commerzbank, which is partly state-owned and has labeled UniCredit’s moves as hostile, declined to comment.
Boris Rhein, the premier of Commerzbank’s home state of Hesse, told a gathering of Germany’s financial elite on Monday that UniCredit needed to give up. “Nobody wants what you are doing. Withdraw!” Rhein said.
Andrea Orcel, the CEO of UniCredit, said in an interview last month with German newspaper FAZ that he hoped to discuss a planned takeover with the new German government.
Commerzbank currently has a workforce of some 42,000 employees.
Edited by: Roshni Majumdar