Commerzbank to cut jobs and boost profits in bid to fend off UniCredit
Commerzbank announced on Thursday it would cut 3,900 full-time positions by 2028 in a bid to boost its financial stability.
The bank nonetheless added that hiring will take place in other 'selected areas', meaning the global number of full-time employees will remain constant at 36,700.
The layoffs will predominantly affect staff in Germany, while hiring will take place in cheaper locations.
Commerzbank's announcement was communicated in a financial update on Thursday, following the bank's publication of full-year earnings two weeks ago.
Germany's second-largest bank brought in a record net profit of €2.68bn in 2024, an annual increase of about 20%.
Revenues rose by 6% to €11.11bn, partially driven by growth in net commission income by 7% to €3.64bn. Net interest income also remained strong.
The redundancy warnings come as Commerzbank is seeking to fend off a hostile takeover bid from Italian lender UniCredit.
Partially through derivatives, UniCredit has built a 28% stake in the German lender, although Commerzbank's management is against a full-blown takeover.
Both German banking officials and politicians fear that a merger could lead to job cuts and hinder lending to small and medium-sized businesses.
Chancellor Olaf Scholz, at the end of last year, criticised efforts 'to aggressively acquire stakes in companies without any cooperation, without any consultation, without any feedback'.
Andrea Orcel, CEO of UniCredit, said on Tuesday that the bank would launch a formal takeover bid once Germany had appointed a new government, following elections at the end of the month.
If Commerzbank can strengthen its business prospects before then, the lender will find it easier to resist a takeover.
The firm announced on Thursday that it is aiming to achieve a net profit of €4.2bn in 2028, along with a return on tangible equity of 15%.
It said its cost-income ratio is expected to improve to around 50% in the same year, compared to last year's 59%.
Looking at results for 2025, Commerzbank predicts a profit decline to €2.4bn due to restructuring costs equal to €700 million.
The bank is nonetheless looking to boost dividends and shareholder payouts.
Based on 2024 earnings, the lender is proposing a dividend of €0.65 per share, up from €0.35 last year.
Commerzbank plans a payout ratio of more than 100% over the 2025 to 2028 period, after the deduction of restructuring costs and Additional Tier 1 (AT 1) bond coupons.
In a separate release on Thursday, the German lender announced that it had launched a strategic partnership with Visa.
Commerzbank customers will primarily receive Visa debit and credit cards, which the lender argued will 'make shopping abroad and online even easier for the bank's customers'.
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