Commerzbank to cut 9,600 jobs, suspend dividend payment

Commerzbank, Germany's second biggest lender, yesterday said that it plans to cut 9,600 jobs over the next four years and suspend dividend payment amid low interest rates and shift to online banking.

The Frankfurt-based lender, part owned by the state, will cut 9,600 of its 45,000 employees, but said that it will create around 2,300 new jobs in areas of business growth.

''The focus on the core business, with some business activities being discontinued, and the digitalisation and automation of workflows will lead to staff reductions amounting to around 9,600 full-time positions,'' Commerzbank said in a statement.

''At the same time, around 2,300 new jobs will be created in areas of business growth. Hence the net number of jobs shed will amount to around 7,300 full-time positions,'' the statement added.

Commerzbank plans to merge two of its largest businesses, which will result in a €700 million write-off and a loss for this quarter.

Commerzbank also said that in order to cover its wide ranging restructuring costs by €1.1 billion, which will cut its cost base from €7.2 billion a year to €6.5 billion by 2020.

''By the end of 2020 Commerzbank will have sustainably increased its profitability. As part of the ''Commerzbank 4.0'' strategy, it will concentrate on its core businesses, digitalise 80% of relevant processes, and thereby achieve significant efficiency gains. Its business will be focused in two customer segments, ''Private and Small Business Customers'' and ''Corporate Clients,'' the statement added.

''The Mittelstandsbank and Corporates & Markets segments will be merged and trading activities in investment banking scaled back. This will reduce earnings volatility and regulatory risk and will free up capital to be invested in core client businesses.''

The bank will stop dividend payments "for the time being", although it had originally planned to pay a dividend for this year

The bank had doled out €0.20 a share as dividend for 2015, which was the first since its €18 billion government bailout in 2008.

Shares in Commerzbank have lost more than 40 per cent of their value since the start of the year, and fell by further 2.5 per cent after yesterday's restructuring announcement.