Commerzbank Woes

Banking on a Turnaround

Window cleaners work at the logo of the Commerzbank building in Frankfurt, Germany, Friday, Sept. 23, 2016. (AP Photo/Michael Probst)
Window cleaners work at the logo of the Commerzbank building in Frankfurt, Germany.
  • Why it matters

    Why it matters

    The market is already abuzz with details of CEO Martin Zielke’s restructuring plan, to be officially presented on Friday, once Commerzbank’s supervisory board has signed it.

  • Facts

    Facts

    • Commerzbank on Thursday said it will cut 9,600 jobs – out of a workforce of 54,000 – and suspend dividends to shareholders.
    • Earnings at Commerzbank have been suffering since the start of this year, and the bank isn’t getting a handle on costs.
    • Commerzbank is still 15-percent owned by the German government, which bailed out the bank after the 2008 financial crisis.
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    Audio

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If Martin Zielke’s aim was to shock investors, he’s already succeeded. The new boss of struggling Commerzbank unveiled the details of a radical new restructuring plan Thursday morning, confirming Handelsblatt reports from earlier this week that have already made Germany’s second-largest bank a major talking point for days.

It doesn’t get much more ambitions than this: 9,600 jobs will go, out of a total 54,000. That’s nearly one-fifth of the workforce. Dividend payments to shareholders, which were only reinstituted last year for the first time since the financial crisis, will be suspended once again as the restructuring is expected to cost more than €1 billion ($1.12 billion).

“If that’s how it’s really going to be, then it would be a bold move,” said one fund manager ahead of the formal announcement.

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