Commerzbank has joined the ranks of other European banks that have been forced into adopting a litany of cost cutting measures amidst diving revenues and consecutive lackluster quarters. The lender is also slated to announce new personnel changes to its group, which includes moves at multiple rungs of the ladder, according to a Reuters report.
The German lender has opted to elevate Stefan Schmittmann to the role of Supervisory Board Chairman – Mr. Schmittmann will step into the role after serving as Commerzbank’s Chief Risk Officer, succeeding Klaus-Peter Mueller in early 2018. As its newest chairman, Mr. Schmittmann will focus on overseeing the execution of a newly launched strategy at the group that Chief Executive Martin Zielke, who recently took office in May, is set to embark on this autumn.
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Profitability in Focus
Changing courses and embarking on cost cutting or retail transformational strategies, as Deutsche Bank and Standard Chartered have done, have been necessitated by decreasing profit margins and profitability. Nearly every big bank in the US and especially Europe has been stung with rising costs of labor, with cities such as London being the hardest hit. Consequently, banks have let employees go by the thousands.
Leading the cuts has been Deutsche Bank, which announced last October that it would jettison upwards of 35,000 workers over the next few years. Other banks have followed suit, focusing mostly on technology or back office roles. For its part, Commerzbank is expected to cut up to 20% of jobs at its Mittelstandsbank business, which has historically provided steady earnings from lending to Germany’s small and medium-sized business community.
It will be interesting to see where the majority of cuts will take place or whether Commerzbank opts to consolidate a number of its units. Groups such as UBS have seen shifts to its wealth management business, while other lenders have gutted FX and fixed income desks in a bid to kindle profits.