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Commerzbank to axe nearly 10,000 jobs amid restructure

Published 29/09/2016

Commerzbank will reduce its workforce by 9,600 amid a major restructure (AP)
Commerzbank will reduce its workforce by 9,600 amid a major restructure (AP)

Commerzbank, Germany's second-biggest lender, is to axe nearly 10,000 jobs and halt dividend payments as it embarks on a major restructure of the business.

The move will impact 9,600 staff - more than a fifth of its workforce - but it will also create 2,300 new jobs in "areas of business growth".

The European banking giant said the overhaul will cost around 1.1 billion euro (£948 million) as it focuses on its core business by digitising "80% of relevant processes".

The Frankfurt-based lender, which employs about 45,000 full-time staff, plans to cover the restructuring costs by stopping dividend payments, but said it would retain full earnings.

In a statement, the lender said: "The focus on the core business, with some business activities being discounted, and the digitalisation and automation of workflows will lead to staff reductions amounting to around 9,600 full-time positions."

It added that by end of 2020 the bank will have " sustainably increased its profitability".

The announcement comes after Deutsche Bank calmed investor concerns on Wednesday by bolstering its balance sheet by £935 million after selling its Abbey Life pensions book.

Shares in the German lender are back in positive territory after it suffered a two-day sell-off sparked by fears that a hefty settlement proposal tabled by US authorities could deal a hammer blow to its capital strength.

The US Department of Justice (DoJ) has hit the bank with a 14 billion US dollar (£10.5 billion) settlement proposal following a probe into the German lender's sale of mortgage-backed securities during the financial crisis.

The German government has denied that it is preparing a rescue plan for the lender, while Deutsche Bank's chief executive John Cryan told Bild that government support was ''out of the question''.

Former chancellor Lord Lamont said on Tuesday that s truggling German banks pose a looming threat to the European Union, which will ''hit a fence'' as the bloc struggles with a series of crises over the coming years.

Credit Suisse chief executive Tidjane Thiam also warned earlier this week that the banking industry was in a ''very fragile situation'' as a ''relatively minor piece of news'' could trigger an extreme movement in share prices.

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