Commerzbank is facing mounting pressure as Italian banking giant Unicredit eyes a potential takeover. In an effort to enhance efficiency and maintain its independence, the German financial institution has announced plans to cut thousands of jobs.
Major Job Cuts by 2027
By the end of 2027, Commerzbank intends to eliminate approximately 3,900 full-time positions, with 3,300 of them in Germany. The cuts will primarily impact the bank’s headquarters in Frankfurt, focusing on back-office operations and administrative functions. Despite this reduction, Commerzbank expects to keep its total workforce stable at around 36,700 employees worldwide. The bank plans to create new jobs, particularly at its Polish subsidiary, mBank, and in Asia.
Impact on Munich Branches Uncertain
It remains unclear whether Commerzbank’s restructuring will affect its branches in Munich. The bank currently operates 15 locations in the Bavarian capital, including branches at Kurfürstenplatz, Löwengrube, Olympia Shopping Center, PEP Shopping Center, Harras, the central train station, Leopoldstraße, Dachauer Straße, Neuperlach, Ostbahnhof, Pasing, Prinzregentenplatz, Promenadeplatz, Rotkreuzplatz, and Solln.
To manage the workforce reduction in a socially responsible manner, Commerzbank is relying on natural attrition and an early retirement program. The bank has already reached preliminary agreements with employee representatives, which are expected to take effect in 2024.
Unicredit Intensifies Takeover Efforts
The job cuts come at a time when Commerzbank is under increasing pressure from Unicredit. The Milan-based bank currently holds about 28% of Commerzbank’s shares, including 9.5% through direct stock ownership and 18.6% via financial instruments. Unicredit CEO Andrea Orcel has expressed interest in acquiring Commerzbank but has yet to make a formal offer. Under German law, Unicredit would be required to submit a takeover bid only if its stake reaches 30%.
Both Commerzbank’s management and its employee representatives strongly oppose the potential takeover, which they have labeled as “hostile.” The German government has also expressed concerns. The federal government, which bailed out Commerzbank during the 2008-2009 financial crisis, still owns approximately 12% of the bank’s shares.
Profit Growth and Higher Payouts to Shareholders
Commerzbank CEO Bettina Orlopp aims to strengthen the bank’s independence by increasing profits and setting ambitious financial goals. The bank’s net income is projected to grow from €2.7 billion in 2023 to €4.2 billion by 2028. However, a temporary decline to €2.4 billion is expected in 2024 due to the estimated €700 million in one-time costs associated with the job cuts.
To reward shareholders, Commerzbank has outlined plans for significant dividend distributions. In 2025, the bank intends to pay out more than 100% of its annual net profit. Between 2026 and 2028, the payout ratio is expected to remain at 100%, contingent on the bank’s strategic progress and overall economic conditions.
Beyond cost-cutting measures, Orlopp is betting on revenue growth, particularly in the bank’s fee-based business. Commerzbank’s cost-to-income ratio, which stood at 59% in 2023, is targeted to decrease to 57% by 2025 and further drop to 50% by 2028.
As the bank pushes forward with its restructuring strategy, it remains to be seen whether these measures will be enough to fend off Unicredit’s takeover ambitions and secure Commerzbank’s long-term independence.