Commerzbank to Eliminate 2,800 Jobs, Reduce Bonuses (Update1)
By Silje Skogstad
Frankfurt, March 14 (Bloomberg) -- Commerzbank AG, Germany's fourth-biggest bank, plans to eliminate about 2,800 more jobs and slashed bonuses for investment bankers by more than half after the first annual loss last year, people familiar with the matter said.
The cuts would bring the total announced to 7,100, or almost 19 percent of the workforce, since the bank began shedding jobs in October 2001. The plan includes about 480 jobs in the securities unit, 13 percent more than announced last month, the people said.
Chief Executive Officer Klaus-Peter Mueller is trying to cut costs after the Frankfurt-based bank lost 298 million euros ($319 million) last year. Bonuses for investment bankers are being slashed as fees from advising on mergers and share sales dried up.
``What this says is that the underlying finances are pretty unsound,'' said Clark Ray, senior partner at Dagama Consulting, a London-based recruitment firm working with investment banks. ``People cutting back on bonuses is to be expected but if you are smart, you pay the guys making the gravy.''
The job cuts may be announced as early as next week, the people said. Commerzbank's management board holds its regular meeting on Tuesday. Spokesman Peter Pietsch declined to comment and said no decision has been made on personnel reductions yet.
Share Decline
Commerzbank shares have lost 70 percent in the past year, giving the company a market value of 3.25 billion euros.
The bank has said it would give details on the cost-reduction plan, which it calls ``cost-cutting offensive plus,'' in March. It set aside 177 million euros in the fourth quarter to pay for job cuts at its securities and consumer-banking division.
Further job cuts ``might be unavoidable,'' Mueller said at a Feb. 5 press briefing. ``We're not expecting a good year.''
Commerzbank told the 1,600 investment bankers about their bonus reductions this week. The biggest bonuses were paid in debt capital markets, fixed income and asset-backed securities, which contributed most to investment-banking earnings last year. Bonuses for equity derivatives workers were cut, the people said. |
