Commerzbank Cuts Jobs to Combat Unicredit Takeover Pressure
Commerzbank is taking decisive steps to create financial breathing space in the face of a potential takeover by Italy's Unicredit, announcing plans to cut approximately 3,900 full-time positions by the end of 2027. Out of these, about 3,300 job reductions will occur in Germany, as disclosed by the DAX-listed bank in Frankfurt. Despite these layoffs, Commerzbank plans to offset this reduction by creating new positions in other areas, such as at its Polish subsidiary mBank and in various locations in Asia, ultimately keeping its global workforce stable at around 36,700 full-time employees.
The planned job cuts in Germany will primarily target the headquarters and additional locations in Frankfurt, focusing particularly on staff functions and back-office roles. Currently, Commerzbank employs approximately 20,000 individuals in its domestic market, making these layoffs significant.
To ensure a socially acceptable transformation process, Commerzbank is banking on demographic change and natural turnover. Framework points for a part-time retirement program have already been agreed upon with employee representatives, set to rollout later this year.
This move comes as Unicredit increases pressure on Commerzbank by raising its stake in the bank. After the partial exit of the federal government last autumn, Unicredit significantly boosted its shares to just over 28%, with around 19% through financial instruments. CEO Andrea Orcel appears to be eyeing a takeover of Commerzbank, although there is currently no formal offer.
It's noteworthy that should Unicredit reach a stake of 30%, it would be legally required to present a takeover bid to Commerzbank shareholders. However, both Commerzbank's management and the works council are actively resisting this potential takeover. The German political landscape is also against it, as the federal government still retains around 12% of the shares after rescuing the bank during the 2008-2009 financial crisis with taxpayer funds.
In light of these challenges, new CEO Bettina Orlopp, who took office on October 1, is focused on safeguarding Commerzbank’s independence by targeting higher profits and more ambitious goals. The bank aims to significantly enhance its profit margins in the upcoming years, forecasting an increase from approximately €2.7 billion last year to €4.2 billion by 2028. However, the bank anticipates a dip in profits this year to around €2.4 billion due to the anticipated costs of about €700 million associated with the job cuts.
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