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Commerzbank plans to cut thousands of jobs to try to ward off unwanted advances from Italian UniCredit, according to sources close to the matter.
The plans, which have not yet been formalized, are expected to be revealed to the workers’ council in the coming weeks, two of the sources said. A person close to the discussions told the Financial Times that the figure would likely be “in the low thousands”.
The German bank’s new chief executive, Bettina Orlopp, is due to present an updated strategy on February 13 to show that the bank can improve its profitability and shareholder payouts on its own.
UniCredit, led by its chief executive Andrea Orcel, has acquired a position in Commerzbank which has the potential to make it the bank’s largest shareholder if it gains regulatory approval.
Orcel has made no secret of its ambitions for Commerzbank, including a complete takeover of the German rival.
Commerzbank investors have generally been supportive of a deal, with the exception of the German government, which still holds a 12 percent stake after selling a 4.5 percent stake to UniCredit last year.
Analysts estimate that a tie-up would result in billions of euros in savings, as the enlarged bank would eliminate duplicate functions.
A crucial point of resistance from unions and the government has been the possibility of UniCredit wielding the ax in Germany, where it already has a German subsidiary, HypoVereinsbank (HVB).
Commerzbank unions have warned that a takeover by UniCredit could put up to 15,000 jobs at risk – an issue that has taken on an even more sensitive political dimension in the run-up to German federal elections this month. next.
The possibility for Commerzbank to initiate budget cuts, even without being bought by the Italian bank, would mark a new chapter in its prolonged restructuring.
Commerzbank has already cut thousands of jobs and closed about half of its 800 branches since 2021, when former Chief Executive Manfred Knof embarked on a turnaround effort.
These changes helped increase operating profits and triple the bank’s stock price over the past three years, and in 2023 it embarked on the first share repurchase program of its history.
But UniCredit’s increased stake has put additional pressure on the German bank to prove it can deliver better profitability and shareholder value as an independent company than as part of the empire from the Italian bank.
Germany’s second-largest listed bank has struggled to cope with higher costs than its rivals, including HVB. Orlopp has already raised Commerzbank’s performance targets since UniCredit’s approach in September.
Even some insiders have expressed doubts about Commerzbank’s ability to present a standalone case that would offer shareholders more value than a merger, given the potential synergies involved in a deal.
A person with knowledge of the matter suggested Orlopp was now considering accelerating a further restructuring that was previously seen as an option for the future.
Another person close to the discussions said job cuts could be driven by digitalization, particularly the adoption of artificial intelligence, with IT functions potentially being “offshored” to other European countries outside the ‘Germany.
Commerzbank said its strategy update, due to be presented next month alongside its annual results, was still being developed and that “we cannot anticipate the upcoming board discussions administration and supervision.
