Employees at Corealcredit Bank in Frankfurt are discovering that a change in ownership can sometimes come with a bitter aftertaste.
In March, when the specialist property lender Aareal Bank completed its takeover of Corealcredit, Aareal chief Wolf Schumacher hailed the acquisition as an “attractive” opportunity. “In recent years, Corealcredit Bank has successfully reoriented itself,” he said at the time. “We are pleased to greet Corealcredit Bank as a new subsidiary in the Aareal Bank corporate group.”
For Aareal Bank, the deal to buy its smaller competitor from the U.S. private equity group Lone Star Funds for €342 million ($450 million) was indeed attractive. The price was so low that Aareal booked an extraordinary profit of €150 million.
For employees of Corealcredit, however, the takeover was followed by an extraordinary shock: One in every five was slated for dismissal immediately after their welcome to Aareal’s world.
“The managing board has conducted a critical review of the business model and structures of Corealcredit Bank AG,” said a company document. “It is accordingly necessary to adapt the cost structure to the reduced business volume.”
So now 33 of 161 jobs will be eliminated.
More cuts could follow as outsourcing is considered in some areas. Compared with other takeovers and restructurings, this might seem insignificant. For individual workers, though, that doesn’t make a difference. Aareal had “sold us down the river,” one Coreal employee. “Nothing needs to be restructured here. We are being squeezed dry.”