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 Frankfurt based banking giant said the overhaul will cost around f1.1 billion (£948 million) as it focuses on its core business by digitising “80% of relevant processes”.
With about 45,000 full-time staff, it said it plans to cover the restructuring costs by stopping dividend payments, but said it would retain full earnings.
“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 said, adding that by end of 2020 it would have “sustainably increased its profitability”.
The announcement comes after Deutsche Bank calmed investor concerns on Wednesday by bolstering its balance sheet by £935m after selling its Abbey Life pensions book.
Shares 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 bn (£10.5bn) settlement proposal following a probe into the German lender’s sale of mortgage-backed securities during the financial crisis.