Commerzbank says state support boosted restructuring efforts
Chief Manfred Knof says government should sell its stake only ‘over the medium term’
Commerzbank’s chief executive has agreed that state support for the lender should eventually end but added it was an important boost to progress on a restructuring that will cut staff in Germany by a third.
Manfred Knof, who joined Commerzbank at the start of the year from Deutsche Bank, is aiming to cut one in three jobs at the bank in Germany by 2024 and to close almost half its branches.
Berlin bailed out Commerzbank in 2009 and remains its single largest shareholder with a 15.6 per cent stake. Knof was parachuted in after a boardroom battle that led to the resignation of both the chief executive and the chair in the summer of 2020.
Knof told the Financial Times that the government’s support for the restructuring had been “very helpful” for securing employee support.
Commerzbank has had high costs and weak revenue growth for years and has been hit hard by low interest rates. It is one of the most important lenders to Germany’s small and medium-sized companies, and finances one-third of the country’s exports.
New finance minister Christian Lindner, the leader of the pro-market Free Democrats, in the past has called for the full privatisation of the bank. He also campaigned on the wider promise of reducing the government’s influence in business and dialling down state ownership of private sector companies.
“Over the medium term, I support and approve the view that a private-sector bank like Commerzbank should not have the government as a shareholder,” Knof told the Financial Times. He added that he was focused on the “here and now” and praised workers’ representatives for their constructive approach to the restructuring.
In November, Commerzbank said it would make a small profit this year, despite more than €1bn in restructuring costs and a €200m hit from a botched IT project that was stopped by Knof.
The finance ministry declined to comment on the future of the government’s shareholding. “The handling of the government’s stake [in Commerzbank] is decided by the interministerial steering committee,” it said in a statement.
Knof told the FT that the restructuring was well on track. Some 5,200 employees have already signed voluntary redundancy agreements to leave the bank over the coming three years, from a target of cutting 10,000 jobs. By November, the bank had also ironed out the final details of a €1.9bn severance plan with unions.
“Many sceptics said that it would be impossible to strike a deal within just one year,” he said, adding that this pessimism was proved wrong thanks to the “massive commitment and discipline” from unions.
Knof said that the swift agreement was an “important message to the capital market and our stakeholder: the social partnership [between employers and employees] in Germany is working”.
Germany’s new chancellor Olaf Scholz, a Social Democrat, in February backed Commerzbank’s turnround plan. “Everyone knows that something draconian needs to be done,” he said when he was finance minister.
At the moment, a sale of the government’s stake would leave taxpayers with heavy losses: it is currently worth just €1.3bn, some 75 per cent less than what the government paid for it more than a decade ago.