Germany’s Commerzbank (CBKG.DE) will cut more than a fifth of its workforce and suspend its dividend as it tackles the challenges of low interest rates, weak profits and the shift to online banking.
Germany’s second biggest lender said on Thursday it plans to cut 9,600 of its 45,000 full-time positions, a more drastic move than the 10 percent staff reduction at larger rival Deutsche Bank (DBKGn.DE), which remains under pressure for deeper cost cuts.
Squeezed by the European Central Bank’s money printing policy, German lenders have been seeking ways to boost revenue by passing on costs to corporate customers and increasing fees for retail depositors, but profit margins remain thin in one of Europe’s most competitive banking markets.
Commerzbank said its overhaul, which includes merging its four main business segments into two and moving 80 percent of its processes online, would make its earnings less volatile.
Chief Executive Martin Zielke, who has been working on the plan since taking the helm in May, was due to lay out details at a news conference at 0930 GMT on Friday.
“We simply don’t earn enough money to lead the bank sustainably and successfully into the future. And this situation will get worse if we don’t do something about it,” he said in a draft note to employees inadvertently posted on the bank’s internal website and seen by Reuters.