Commerzbank announced on Thursday it would cut 3,900 jobs and revealed more ambitious financial targets as part of a strategy revamp aimed at fending off UniCredit's advances for a tie-up between the German and Italian lenders. The job cuts, mainly in Germany and expected by 2028, will be offset by hiring outside the country, maintaining the bank's full-time positions at 36,700. CEO Bettina Orlopp has been leading the strategic update which aims to showcase the bank's "significant value potential."
The battle between Commerzbank and UniCredit has become a focal point in Germany's efforts to protect its financial institutions. Commerzbank, as the nation's No. 2 bank, is striving to prove its viability as an independent entity to investors with its recent announcements.
Analysts from Deutsche Bank described the new guidance as "bullish," while RBC referred to the targets as "punchy." Commerzbank, labeled UniCredit's actions as hostile, is set to incur 700 million euros ($730 million) in restructuring charges by 2025. The bank has also adjusted its 2027 targets, aiming for a 3.8 billion euros net profit, up from the previous 3.6 billion euros goal, and a more ambitious cost-to-income ratio target of 53%, compared to the previous 54%.
Following a successful 20% increase in results, Commerzbank is focused on advancing to the next level, according to CEO Orlopp. UniCredit's CEO, Andrea Orcel, has expressed interest in a potential merger, a move that has raised concerns among German stakeholders. Nevertheless, Commerzbank is planning targeted acquisitions and strategic partnerships to strengthen its position.
The job cuts at Commerzbank will occur through natural fluctuations and early retirements, with new hires planned in Poland and other cost-effective locations. The bank is determined to avoid drastic cuts under UniCredit, emphasizing a balanced approach. Despite pressure from UniCredit for a merger, Germany's political and business leaders remain resolute in their opposition, with stakeholders differing in their support for potential discussions.