German lender Commerzbank has announced plans to axe 9,600 jobs, suspend dividend payments, and shrink securities trading in order to bolster profitability.
As part of the Commerzbank 4.0 strategy, the bank will concentrate on its core businesses of ‘private and small business customers’ and ‘corporate clients’.
It will also digitalise 80% of relevant processes, merge Mittelstandsbank that deals with small and medium-sized firms with corporates & markets segments, as well as scale back trading operations.
“This will reduce earnings volatility and regulatory risk and will free up capital to be invested in core client businesses,” the bank said.
However, the bank said that it will also create nearly 2,300 new jobs in areas of business growth, which takes the net job cuts to about 7,300.
The restructuring are projected to trigger a writedown of about €700m in the third quarter of 2016, resulting in a net loss in the quarter, the bank said.
With the changes, the bank is targeting a net return on tangible equity of at least 6% by the end of 2020.