Commerzbank is set to announce a revised strategy on February 13, focusing on more ambitious financial goals amidst increasing interest from Unicredit, which has raised its stake to 28%. CEO Bettina Orlopp aims to enhance efficiency, potentially leading to job cuts. While domestic roles may be affected, IT positions could grow in other countries. Concerns over Unicredit’s intentions have been voiced, with the future of Commerzbank ultimately resting with its shareholders amid potential takeover scenarios.
Commerzbank’s Strategic Shift Amid Unicredit’s Interest
The competitive landscape between Commerzbank and Unicredit is set to intensify as Commerzbank prepares to unveil its revised strategy on February 13. This announcement will outline more ambitious financial targets as part of its 2024 balance sheet presentation, marking a pivotal moment for Germany’s second-largest commercial bank.
Potential Job Reductions and Market Impact
Commerzbank’s CEO, Bettina Orlopp, has emphasized her commitment to enhancing both efficiency and profitability within the bank. The industry’s closely monitored cost-income ratio is projected to improve from the current 59% to 54% by 2027. However, achieving these objectives might necessitate a reduction in the workforce, with reports suggesting discussions around eliminating “a few thousand jobs.” Previously, the bank had already streamlined approximately 10,000 positions, resulting in a current workforce of around 39,000 employees.
While job losses may predominantly affect domestic roles, there is potential for job creation in IT sectors abroad, particularly in countries like the Czech Republic and Poland, where Commerzbank holds a majority stake in mBank. Union representatives might support job cuts as long as they are socially responsible. However, if Unicredit were to gain control, the job reductions could escalate significantly, with estimates suggesting potential losses of up to 15,000 positions.
Unicredit, which initially acquired a 9% stake in Commerzbank in September, has since increased its holdings to 28%. The Italian bank currently holds 9.5% directly and an additional 18.5% through derivatives. They are awaiting approval from banking authorities to exceed a 10% stake, which could trigger a mandatory takeover offer if their shares surpass 30%.
Jens Weidmann, chairman of Commerzbank’s supervisory board, has expressed concerns over Unicredit’s approach, labeling it as an unfriendly move. He emphasized the need for trust-building to facilitate open discussions, reflecting on the potential risks to Germany’s financial sovereignty should a takeover occur. Weidmann believes that having two independent banks is vital for maintaining the Frankfurt financial center’s attractiveness.
Ultimately, the decision regarding Commerzbank’s future lies with its shareholders. The board, led by Orlopp, aims to present a compelling strategy while highlighting the significant challenges and risks of a cross-border takeover. Unicredit may seek to solidify its position by making a takeover offer once it receives regulatory approval or by influencing decisions at Commerzbank’s upcoming annual general meeting.
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