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Commerzbank wields axe in cost-cutting drive

Simon Morgan
The entrance of a Commerzbank is seen on November 23, 2012 in Cologne, western Germany. Commerzbank, Germany's second-biggest bank, is looking to axe more than 10 percent of its workforce over the next three years

Commerzbank, Germany's second-biggest bank, unveiled plans on Thursday to axe more than 10 percent of its workforce over the next three years as it tots up the toll from the financial and sovereign debt crisis.

Unions described by the cuts as "absolutely unacceptable" and said they would fight them all the way.

"As part of our strategic agenda announced in November, Commerzbank ... is assuming that 4,000-6,000 full-time jobs will be cut group-wide by 2016," a company spokeswoman told AFP.

The exact number would be determined in talks with unions and labour representatives set to begin in February, she said, adding that it was too early to say where exactly the axe would fall.

On September 30, 2012, Commerzbank's total workforce numbered 56,287.

But the giant services sector union Verdi -- which warned that the bank's German operations and its retail division or high-street branch network in particular would bear the brunt of the cuts -- said the new round of cuts were "not negotiable."

"The proposed measures are absolutely unacceptable. Employees, works councils and unions will close ranks to fight this culling," vowed Verdi board member Beate Mensch.

"This frontal attack on working conditions is incompatible with the goal of offering good banking services, particularly in the private customer business," she said.

Verdi said that under the proposals tabled by management as many as 4,600 jobs would be on the line in Germany, or 15 percent of Commerzbank's domestic workforce.

Management's argument was that the network was up to 30 percent overstaffed, the union said.

The number of branches was indeed boosted sharply when Commerzbank took over rival Dresdner Bank in 2008 and the bank had already set a target of cutting 9,000 jobs in the division by thinning out the network.

While that goal has nearly been achieved, the harsher environment engendered by the long and debilitating financial and sovereign debt crisis means further cuts have become necessary.

Announcing a strategic reorientation back in November, chief executive Martin Blessing had said Commerzbank must face up to the challenges and "new normality" in the industry.

Above all, Commerzbank would seek to "reposition itself both strategically and operationally in the private customers business," he said at the time, adding that "massive cuts" in personnel costs were inevitable.

Blessing pledged that the branch network would become more flexible and the Commerzbank aimed to become a "multi-channel" bank offering customers products and services "anywhere and at any time".

The union Verdi warned that employees would face "a substantial worsening of working conditions.

"Branch opening times are to be extended so that employees will have to work in shifts. And management is also wanting to discuss the introduction of Saturday opening," Verdi said.

On the Frankfurt stock exchange, Commerzbank shares were initially among the biggest losers following the announcement, but turned back into positive territory later in the session, adding 0.86 percent in a stagnant to slightly softer market.

Commerzbank had to be bailed out by the state in 2009 and is still partly state-owned.

But it does not appear to be the only bank mulling job cuts.

According to a report in the daily Frankfurter Allgemeine Zeitung on Thursday, Munich-based HypoVereinsbank, which is owned by Italy's UniCredit, is considering cutting 600 jobs this year, particularly in its retail banking division.

A spokesman for HypoVereinsbank declined to comment on the report.

Germany's biggest lender, Deutsche Bank, is also looking to save billions of euros a year by 2015, including slashing personnel costs.

Last July, Deutsche Bank said it had decided to "reduce headcount predominantly outside of Germany by approximately 1,900 positions," of which 1,500 would be axed in its corporate banking and securities division.