In the latest signs of trouble in the German financial world, Commerzbank has confirmed it is going to reduce its workforce by more than a fifth – cutting 9,600 jobs of its 45,000 full time positions.
However, the group said it hopes to create 2,300 new roles meaning net job reductions will be 7,300.
Facing a slump in earnings, Germany’s second largest lender will also scale back its trading activities, streamline some corporate and markets operations.
To preserve its capital reserves it will not pay dividends to shareholders this year.
At the same time Commerzbank flagged up what it called “considerably higher” losses on loans – primarily to shipping companies – and revealed parts of its business are worth 700 million euros less than previously calculated.
The group said the negative interest rate environment remains challenging for its core business.
The restructuring – which is predicted to cost around 1.1 billion euros – is Commerzbank’s biggest overhaul in years. After it was announced the shares rose briefly and then slipped to finished Thursday’s trading session down 3.09 percent.
Commerzbank’s headcount reduction is more drastic that at its larger peer Deutsche Bank, which is getting rid of about 10 percent of its staff but has suggested deeper cost cutting may be needed.
Deutsche is cutting back and selling assets as it fights a fine of up to $14 billion (12.5 billion euros) from the US Department of Justice as well as a raft of other litigation of alleged wrongdoing.
It has been forced to deny that it has asked the German government for help.