Commerzbank will take 470m euros charge for job reductions

[FRANKFURT] Commerzbank AG will post a restructuring charge of 470 million euros (S$744.6million) in the first quarter for its job cuts program, adding to about a billion euros of related costs booked previously.

The German lender is taking the charge to account for 1,700 job cuts agreed with the works council, it said in a statement on Thursday. New chief executive officer Manfred Knof has vowed to eliminate 10,000 positions in total in Commerzbank's home market to improve profitability in a restructuring that will cost about 1.8 billion euros.

Mr Knof, who took over in January, has embarked on a series of cost cuts after two efforts by his predecessor Martin Zielke to grow his way to profitability through client acquisitions failed. The new CEO is shedding about a third of the German workforce, closing almost half the retail branches and shuttering roughly 30 per cent of the bank's foreign offices, in an effort to save 1.4 billion euros a year.

Meanwhile, the lender's top governance body was plunged into further turmoil after three supervisory board members stepped down following the resignations of the chairman and another board member in March.

Victoria Ossadnik, Rainer Hillebrand and Tobias Guldimann have decided to leave Commerzbank's supervisory board, people familiar with the matter said. A representative for Commerzbank declined to comment. Ms Ossadnik, Mr Hillebrand and Mr Guldimann didn't reply to WhatsApp or LinkedIn messages seeking comment. Frankfurter Allgemeine Zeitung reported the departures late Wednesday.

Commerzbank on Sunday nominated a candidate for the chairman role, Helmut Gottschalk. The lender has already identified candidates to replace the other outgoing supervisory board members and might make an announcement about the changes as early as Thursday, the people said.

Three of the vacancies will be filled by former DZ Bank executive Frank Westhoff, Autobahn GmbH supervisory board member Daniela Mattheus and former Deutsche Telekom AG executive Caroline Seifert, according to people familiar with the plans. Lloyd's of London chief financial officer Burkhard Keese will likely also join the supervisory board, but this will only be announced at a later stage, one of the people said. The four new supervisory board members were first reported by Handelsblatt.

The unprofitable German bank is trying to move on from its latest boardroom crisis. Hans-Joerg Vetter resigned as chairman in March for health reasons and the potential candidate to replace him, Andreas Schmitz, abruptly stepped aside last week. That leaves Mr Knof without the backing of a strong chairman while he seeks to execute the turnaround plan that Mr Vetter helped develop.

Ms Schmitz left after a supervisory board meeting last week in which several members led by the government representative raised questions about a probe by prosecutors against him, people familiar with the matter have said. Ms Schmitz called for a vote of confidence in him that he lost and then decided to resign, they said.

Ms Ossadnik and Mr Hillebrand were the two board members in addition to Mr Schmitz himself who backed him in that vote and they later decided to leave the board as well, according to the FAZ report late Wednesday. Guldimann is leaving after failing to become chairman last summer when Vetter was appointed, FAZ wrote.

The German government is Commerzbank's largest shareholder by far and one of its two supervisory board representatives, Jutta Doenges, played a crucial role in appointing Mr Vetter last year. That appointment followed the joint resignation by Mr Vetter's predecessor, Stefan Schmittman, and the then-CEO Martin Zielke after a barrage of public and private criticism of the lender's strategy by the government and another big investor, Cerberus Capital Management.

BLOOMBERG

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