Commerzbank Plans to Offer Minimum of $22,500 Severance Pay
(Bloomberg) -- Commerzbank AG plans to offer at least 20,000 euros ($22,500) in severance pay to employees who face job cuts as part of a reorganization, according to an internal document seen by Bloomberg.
The amount can be higher depending on the number of years each employee has spent at the Frankfurt-based lender, with each year entitling an employee to at least three-quarters of one month’s gross pay, according to the documents.
Erik Nebel, a spokesman for Commerzbank, declined to comment.
The lender is cutting a net 7,300 jobs by the end of 2020, part of Chief Executive Officer Martin Zielke’s plan to boost profitability by using more digital processes. Commerzbank said on Friday that the restructuring costs associated with that effort would be lower than initially expected and will be booked in the second quarter, leading to a net loss for the current three-months period.
The proposals for severance pay are currently being discussed by the bank’s workers’ council, which needs to approve them. The bank hopes to have a deal by July 13, the documents show.
Commerzbank shares rose 3.2 percent at 2:53 p.m. in Frankfurt. The stock is the biggest gainer this year in the 37-member Bloomberg Europe 500 Banks and Financial Services Index, with a 35 percent increase.
Commerzbank earlier this year sent out early-retirement offers to about 3,000 employees, two people with knowledge of the matter said at the time. That offer entitles eligible employees born before 1962 to a 30,000-euro sweetener.
Updated job-cut plans included in the documents show that full-time staff at Commerzbank’s retail and small commercial client unit, headed by Michael Mandel, would decline by 7.7 percent to 9,406. The business client division would shrink 37 percent to 2,982 positions as a result of the planned divestment of its Equity Markets and Commodities unit, an ongoing transfer of smaller business clients to the retail division, and the shifting of back-office jobs to central units.
Germany’s second-biggest publicly listed lender has vowed to increase the number of retail clients by 2 million by the end of 2020. The business clients division, headed by Michael Reuther, is pulling back from certain product groups including some securities trading.
Commerzbank’s investment bank, labeled Advisory & Primary Markets, is set to see headcount grow from 461 to 497.
Total domestic headcount for Commerzbank staff included in the negotiations with the workers’ councils is set to fall to 21,854 by the end of 2020. The bank expects to cut total group employment to 36,000 over the same period.