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Commerzbank plans to cut 6 000 jobs

Jan 24 2013 18:14 Reuters

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Frankfurt - Commerzbank, Germany's second-biggest bank, plans to cut up 6 000 jobs by 2016 to try to reduce costs as part of efforts to revive its struggling retail business.

The Frankfurt-based bank said on Thursday it would shed 4 000-6 000 full-time positions, as much as 12% of its workforce. Talks with unions will start in February over the exact number of jobs affected, which are expected to be mostly in Germany.

The bank, 25% state-owned since a bailout in the financial crisis, currently employs 56 000 staff at group level, with 49 000 full-time staff.

Labour representatives condemned the cuts at Commerzbank as unacceptable, while analysts said the bank should go further.

The cutbacks form part of a €2bn ($2.66bn) overhaul the bank announced in November, which includes a revamp of its retail business in Germany.

Like other European banks, Commerzbank is battling rising costs from tough new bank rules, while risk-averse customers have put a damper on fee income.
In its retail business, margins are under pressure from deposit wars in Germany's overcrowded retail bank sector.

Jobs are being axed across Europe's banking industry because of the cost of new regulation and the weak business climate. Deutsche Bank, Switzerland's UBS and France's BNP Paribas have announced job cuts, while Britain's Barclays is expected to announce cutbacks next month.

Earlier this week, sources close to UniCredit said that the Italian bank planned to shed about 1 000 jobs at its German arm.

"The cost side is really the only area that banks have left to control," said Bridget Gandy, managing director for financial institutions at credit rating agency Fitch.

In its retail banking overhaul, Commerzbank will introduce longer business hours at branches, requiring staff to work shifts and be flexible about changing locations, a person familiar with the matter said.

Some staff will see their salary cut, while certain services will be outsourced to low-cost suppliers, the person added.

"In our retail business, we clearly have overcapacities," Ulrich Sieber, board member for human resources, said in a statement. "Current staff levels are tailored to demand estimates of 2008 and 2009 which unfortunately did not materialise."

Unions response

Labour representative Beate Mensch from union Verdi said they would seek to extend a guarantee of no forced redundancies until 2016.

"The cuts are dramatic - more severe than during the integration of Dresdner Bank into Commerzbank," a labour representative said, referring to the merger of the two German banks in 2009, after which 9 000 jobs were shed in total.

Analysts said the plan was not radical enough.

"The cuts are not very ambitious. I would have expected them to be carried out faster - until 2016, that is long way off," said analyst Guido Hoymann from Metzler Securities.

Credit rating agency Moody's warned on Thursday that the business environment for banks would remain challenging in 2013, citing a fragile global economic recovery and risks from the eurozone crisis.

Commerzbank shares were up 0.4% at €1.63 at 13:48, while the banking sector was up 0.1%.

No jobs will go at Commerzbank's Polish BRE Bank or at its online subsidiary Comdirect.

The 1 000 job cuts already announced for Commerzbank's internal 'bad bank' - the group's so-called work-out unit for non-core assets - are included in the 6 000 figure announced on Thursday.

Separately, German insurer Allianz said on Thursday that it was closing down its retail banking unit Allianz Bank - which amassed losses of €400m over the last three years - resulting in the loss of 450 jobs in Germany.

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