Commerzbank AG (OTCMKTS:CRZBY) will slash down more than 5,000 jobs, which is 10 percent of its total workforce. The decision is taken after the preliminary deal with staff representative in order to bring down cost, says a report from Reuters citing a person familiar with the development.
According to two people who are familiar with the terms of negotiations, both sides have consented to increase the job cuts. However, a labor source denied any such massive cutback and said that more than 5000 jobs is “clearly too high.”
There was no statement over the news from Commerzbank AG (OTCMKTS:CRZBY), but a spokesperson for trade union Verdi said that the number of jobs to be cut is strange.
Commerzbank job cuts part of restructuring
The German lender is cutting the jobs following the restructuring plan worth 2 billion euro ($2.7 billion) announced in November. Under the overhaul plan, the German retail business of the bank will also be given a face lift.
Stephan Engels, Chief financial officer of the bank said that year 2013 will be a year of transformation for the bank. Commerzbank posted a net loss of 94 million euros in the first three months. The 493 million euro restructuring charge, which is related to 4000-6000 job cuts, is also included in the loss.
According to newspaper Handelsblatt, as per the agreement all 1,200 branches of Commerzbank AG (OTCMKTS:CRZBY) will remain working.
The German Bank wants to slash 1,800 jobs in its retail banking segment towards the end of 2015, but according to certain internal documents the number of jobs to be slashed will increase if the targets remain unachieved.
The state holds 17 percent stake in the Commerzbank after it bailed the lender from the financial crisis. The staff of the bank at present stands at 53,000 staff at group level.
According to a source, the business hours of the bank will be extended and the staff will be required to work in changing shifts and should be ready to get relocated.
SAC gains on short bet
Earlier this month, SAC took a short position on the second largest lender of Germany, Commerzbank. Though it is not a massive short but surely a wise decision from SAC. After the hedge fund took a short position, the shares have declined by some 11 percent as per the data of Bloomberg.
At present, Commerzbank AG (OTCMKTS:CRZBY) is under the restructuring process, which will continue for four years. In the first quarter, the operating profit of the bank declined 19 percent and revenues declined 11 percent.