Commerzbank braced for redundancies

eFC logo

Commerzbank Securities is bracing itself for a wave of redundancies next month after its parent Commerzbank last week gave up its pledge not to cut staff to save costs.

The bank has been the only sizeable US or European investment bank not to have cut jobs this year, apart from Lehman Brothers.

Klaus-Peter Müller, chief executive of Commerzbank, said last week in an interview with German television that he could no longer rule out widespread job cuts to reduce costs. 'We will have to arrive at tough and unpleasant measures and I can no longer rule out a reduction in personnel.'

A spokesman for the bank in Frankfurt said the cost-cutting plans, which are expected to be announced in November, could see as many as 10% of Commerzbank's workforce losing their jobs. He said it will not just be the loss-making retail banking business that will be hit: 'It will affect everybody in every group and every division, including investment banking, securities and asset management. We need to take additional cost-cutting measures because our revenues are continuing to drop.'

If 10% of jobs were to go in each division, the securities division would lose 120 staff, the loss-making asset management division about 200, with 1,400 going in retail banking.

Commerzbank has stubbornly resisted job cuts, despite the mixed performance of its investment banking division. Last year, the securities division made just €63m ($58m) in net profits for the whole year, with a cost income ratio of 90.3%. In the first half of this year, net profits were €43m, with a slight fall in the cost income ratio.

Sources at Commerzbank defended the division's performance compared to other units at the bank, pointing in particular to the strong performance of its derivatives and fixed income trading.

Many rivals see the cuts as overdue. Since 1997, when Commerzbank hired Mehmet Dalman to build an investment bank from scratch, it has been one of the most aggressive recruiters in the European market. It has yet to break into the top tier of investment banks, even in Germany. The bank is integrating its corporate and investment banking divisions.

Close
Loading...
Loading...