Commerzbank to Cut Up to 6,000 Jobs
LONDON – Commerzbank, the second-largest lender in Germany, is planning to cut up to 6,000 jobs in a bid to increase earnings, joining other European banks that have announced restructuring plans in recent months.
The bank said on Thursday that it expected to eliminate 4,000 to 6,000 jobs by 2016, or 7 to 10 percent of its work force.
The layoffs will affect Commerzbank’s global operations, particularly a retail division that had expanded rapidly in recent years, according to a person with direct knowledge of the matter who spoke on condition of anonymity because he was not authorized to speak publicly.
In the wake of tougher capital requirements, sluggish economic growth and growing concerns about risky trading activity, several European banks have announced efforts to reduce their work forces, shed unwanted assets and increase capital reserves.
In October, the Swiss financial giant UBS said it would eliminate 10,000 jobs in its investment bank in a move to reduce exposure to risky trading activity and to focus on its wealth management division.
Barclays, which is to formally announce its own restructuring plan on Feb. 12, also started consulting with staff members in its investment banking unit this week over potential layoffs.
The expected job cuts at Barclays could result in up to a 10 percent reduction, or around 2,000 jobs, in the division, according to two people with direct knowledge of the matter who spoke on condition of anonymity because they were not authorized to speak publicly. On Thursday, Barclays started to reduce the size of its investment banking staff in Asia by 15 percent, or 70 jobs, according to one of the people.
On Jan. 17, the firm’s new chief executive, Antony P. Jenkins, told staff members they should leave the bank if they did not want to help rebuild its reputation. Barclays agreed last year to a $ 450 million settlement with American and British authorities over the manipulation of the London interbank offered rate, or Libor, a crucial benchmark rate.
The layoffs at Commerzbank come after efforts by the bank’s chief executive, Martin Blessing, to sell some of the firm’s 160 billion euros ($ 213 billion) of noncore assets, including shipping and real estate investments. The bank is also trying to reduce its exposure to European sovereign debt because of continuing volatility in countries like Spain and Greece.
Commerzbank said it would start negotiations with employee unions in early February to decide on the final number of layoffs. The announcement comes a day after Mr. Blessing was spotted at a party on Wednesday night at the luxury Belvedere hotel in Davos, whose attendees also included Deutsche Bank’s co-chief executive Anshu Jain. The Commerzbank chief is attending the World Economic Forum in the Swiss town.
Commerzbank received an 18.2 billion euro bailout from the German government in 2008 after its mistimed acquisition of a rival German bank, Dresdner, for 5.5 billion euros at the height of the financial crisis. As part of the deal, the German government still owns a 24 percent stake in Commerzbank.
Shares in Commerzbank bank rose less than 1 percent in morning trading in Frankfurt on Thursday.
European banks have been struggling through a series of recent financial scandals, mounting demands to increase capital reserves and growing political pressure to increase lending to stimulate local economies.
The Continent’s major financial institutions will begin reporting earnings next week, and analysts will be waiting to see if they will follow UBS’s lead in announcing major changes in response to these pressures.
“We believe that UBS has kicked off the much-awaited industry restructuring, even if each bank takes a different path,” Citigroup banking analysts told investors in a research note.
Neil Gough reported from Hong Kong. Jack Ewing contributed reporting from Davos.