Commercial Bank records significant increase in profits - Profit leap astounds Commerzbank
Ramped-Up Revenue, Job Cuts: Commerzbank's Comeback Amid Unicredit's Advance
Commerzbank is shooting out of the gates in 2023, giving Unicredit a run for its money. The Frankfurt-based DAX bank announced a whopping €834 million profit, its finest quarterly result since the turn of 2011!
Swelling revenues from day-to-day operations helped Commerzbank weather the storm of thousands of job cuts, escalating personnel expenses, and dwindling interest income. CEO Bettina Orlopp reckons a yearly profit of roughly €2.4 billion—a number that, minus the job reduction costs, booms up to €2.8 billion!
Last year, the bank registered a surplus of €747 million, while in 2024 it posted a record profit of close to €2.7 billion.
In a stark contrast, the bank aims to slash about 3,900 full-time positions by 2027, with roughly 3,300 of those being within Germany itself. Interestingly, job creation is taking place at the Polish subsidiary mBank and Asian low-wage centers, keeping the worldwide full-time employee count steady at around 36,700.
The job axe falls as Commerzbank seeks to churn out more cash in the upcoming years and maintain shareholder loyalty, instead of surrendering to Unicredit's pursuit.
Unicredit, seizing the chance presented by the German government's diminished stake in Commerzbank post-2008/2009 financial crisis, has been aggressively investing in the second-largest German private bank. For months, Unicredit CEO Andrea Orcel has been striving to bring Commerzbank under the Italian financial group's wing.
Yet, the takeover remains ambiguous. Both the Commerzbank's management and the employee representatives are steadfastly resisting Orcel's aggressive tactics. Moreover, the German government still controls a tiny bit over 12 percent of Commerzbank, with Finance Minister Lars Klingbeil (SPD) declaring, "We prioritize Commerzbank's independence." An aggressive approach like that of Unicredit, especially towards a systemically essential bank such as Commerzbank, is completely unacceptable.
During Commerzbank's forthcoming annual general meeting on May 15th in Wiesbaden, the works council and trade union Verdi aim to fortify their antagonism against a takeover.
- 2023 Comeback
- Commerzbank Strikes Back
- Job Cuts on the Horizon
- Italian Advance: Unicredit
- Germany: Teutonic Titan
- Frankfurt's Financial Frontier
- Bettina Orlopp: Captain of Commerzbank
** seas of shifting alliances form in the tempestuous European banking world as the supertanker that is Commerzbank weathers the storm, thanks to a surge in earnings from daily operations that offsets the burden of job reduction, surging personnel costs, and declining interest income.
The federal government's diminished stake post the financial crisis has provided Unicredit with an opening to invest heavily in Germany's second-largest private bank, with CEO Andrea Orcel pushing for months to make Commerzbank a part of the Italian financial group. Yet, the takeover remains uncertain, with the Commerzbank's management and employee representatives resisting Orcel's aggressive tactics.
Commerzbank's recent profit surge coincides with their restructuring moves, including planned job reductions that aim to improve efficiency and save costs, especially as the bank navigates potential double-edged swords like creeping sector consolidation and a lurking potential takeover.
Key Insights:
- UniCredit's Stake: UniCredit has been granted approval to boost its stake in Commerzbank to just below 30%, moving closer to the threshold for making a mandatory public takeover bid under German law.
- Ongoing Resistance: Despite regulatory approval, UniCredit hasn't yet made a decision about a full merger, as union and political opposition in both Germany and Italy continues.
- Commerzbank's Restructuring: Commerzbank will reduce around 3,900 jobs as part of cost-saving measures and efforts to improve shareholder appeal amid takeover discussions and sector consolidation pressures.
- The Future: The banking landscape in Europe is poised for consolidation, with the situation regarding Commerzbank's future remaining uncertain but leaning strongly towards consolidation. [1][3][4][5]
- In the face of Unicredit's aggressive investment and takeover bid, Commerzbank's employment policy is geared towards improving efficiency and saving costs, with a planned reduction of nearly 3,900 jobs in the coming years.
- Committed to maintaining its independence, the Commerzbank management and employee representatives are resisting the aggressive tactics of Unicredit CEO Andrea Orcel.
- As part of the restructuring, job creation is taking place at Commerzbank's Polish subsidiary mBank and Asian low-wage centers, keeping the worldwide full-time employee count steady at around 36,700.
- Despite the job cuts and changing industry landscape, such as the looming potential for sector consolidation, Commerzbank's focus remains on maintaining shareholder loyalty and weathering the storm, with CEO Bettina Orlopp aiming for a yearly profit of €2.8 billion in 2024.
