Commerzbank plans 3,000 job cuts, raises targets as it fends off UniCredit takeover
Commerzbank's Strategy to Remain Independent Amid UniCredit Takeover Attempt
By Tom Sims and Alexander Hübner
Background: UniCredit's Takeover Bid
FRANKFURT, May 8 (Reuters) - Commerzbank plans to cut 3,000 jobs to help it reach more ambitious profit targets as part of a strategy to fend off a takeover by Italy's UniCredit, the German bank said on Friday.
For months, the Italian and German banks have been in a standoff, pitting UniCredit CEO Andrea Orcel and his expansion plans against a German lender critical for the financing of Europe's largest economy and its financial hub Frankfurt.
The more ambitious plan follows UniCredit's move earlier this week to officially launch its takeover attempt at a below-market price of 37 billion euros ($43.43 billion).
Commerzbank's Response to UniCredit
"UniCredit’s communicated plan remains vague and bears considerable execution risks, while using misleading narratives that discredit Commerzbank," the bank said on Friday.
Job Cuts and Restructuring Efforts
History of Layoffs
The staff cuts mark a third round of layoffs in recent years. Commerzbank shed 10,000 people, or a third of its German workforce, earlier this decade and announced plans to cut another 3,900 last year. Orcel has made clear that he would slash the Frankfurt-based headquarters.
Financial Impact of Restructuring
Commerzbank also flagged around 450 million euros in restructuring costs as it cuts the jobs.
Battle for Independence
Significance for Germany's Financial Sector
The battle for its independence has become a test case of Germany's ability to fend off foreign suitors and prevent its financial centre from losing one of its few remaining big commercial banks.
The nation's No. 2 bank is hoping that the targets unveiled on Friday will convince investors it can thrive as an independent company.
Upgraded Financial Targets
New Revenue and Profit Goals
Among the upgraded goals, the bank now projects revenue of 15 billion euros in 2028, up from an earlier target of 14.2 billion euros, and a 2028 profit of 4.6 billion euros, better than its previous goal of 4.2 billion euros.
Analyst Expectations
Analysts had already largely expected Commerzbank to surpass its 2028 targets laid out last year.
UniCredit's Stake and Restructuring Plan
Orcel's Ambitious Merger Attempt
Orcel shocked Germany's corporate and political establishment in 2024 when his Italian bank - also that nation's No. 2 - snapped up a hefty stake in Commerzbank and began pressing for a tie-up in the most ambitious attempt yet at a pan-European bank merger.
UniCredit's Proposed Efficiencies
Last month, Orcel presented his own restructuring plan for Commerzbank, which foresaw cost efficiencies of 1.3 billion euros and staff cuts of 7,000.
UniCredit's Arguments for the Merger
UniCredit, which has become Commerzbank's largest shareholder with a stake of just under 30%, has argued that its German competitor is not fulfilling its potential and that Europe would benefit from bigger banks in a world of chaotic geopolitics.
Political and Public Response
Commerzbank's Commitment to Independence
All the while, Commerzbank has vowed to remain independent. The leaders of the two banks talked earlier this year but discussions fell apart after Easter.
German Political Opposition
UniCredit's approach has faced stiff opposition in Germany. On Thursday, German Chancellor Friedrich Merz said that Germany rejects hostile and aggressive takeovers in the banking sector.
Chancellor Merz's Statement
"This is not how one treats institutions such as a bank in Germany, namely Commerzbank. This is how trust is destroyed, not how new trust is fostered," Merz said.
Government Ownership and Potential Actions
Germany still owns 12% of Commerzbank after a bailout during the financial crisis two decades ago, and some politicians and bankers are calling for Berlin to increase its stake to fend off UniCredit, a move that would come with significant hurdles.
Recent Financial Performance
First Quarter Results
The announcements came as the bank reported net profit rose 9.4% to 913 million euros in the first quarter, above the 868 million euro consensus forecast published by Commerzbank.
($1 = 0.8522 euros)
(Reporting by Tom Sims and Alexander HuebnerEditing by Ludwig Burger, Sam Holmes and Tomasz Janowski)
