Commerzbank Names Deutsche Bank’s Knof CEO to Lead Cost Cuts

(Bloomberg) -- Commerzbank AG appointed Deutsche Bank AG German retail head Manfred Knof its new chief executive officer as it braces for its heaviest restructuring in a decade.

Knof, 55, who will take over from Martin Zielke on Jan. 1, has earned his reputation as a tough cost cutter, people close to him said, and he’s going to have to oversee a turnaround program at Commerzbank that may lead to about 10,000 jobs cuts, Bloomberg News has reported.

“Manfred Knof is an experienced and highly effective top manager who has proven himself in a wide range of tasks in the financial services industry,” Commerzbank Supervisory Board Chairman Hans-Joerg Vetter said in a press release late Saturday. “He brings the necessary expertise and human leadership skills for the tasks that lie ahead of the bank.”

Germany’s second-biggest bank was plunged into a leadership crisis in early July when Zielke and Vetter’s predecessor, Stefan Schmittmann, jointly said they would resign. Their departures followed months of criticism from the lender’s main shareholders -- the German government and Cerberus Capital Management -- of the bank’s poor performance. Commerzbank shares are down more than 26% this year, compared with less than a 1% decline for Deutsche Bank.

One of two government representatives on the supervisory board, Jutta Doenges, led the search for the new chairman during the summer. Once installed, Vetter’s first important task was to find a new CEO. Doenges and Cerberus support Knof, people familiar with their thinking said.

The bank is currently working on a new strategy that may shutter as many as 800 retail branches and scale back the bank’s foreign presence in addition to the workforce reduction, Bloomberg News has reported. The appointment of Knof means the bank may soon be able to move ahead with adopting and presenting the new strategy.

Read: Commerzbank ‘Plan C’ Is Taking Shape With Lots of Cuts in Store

In choosing Knof, Vetter decided to pass over two senior executives seen as potential Zielke successors -- Chief Financial Officer Bettina Orlopp and corporate clients head Roland Boekhout. Boekhout was initially considered the leading candidate before Vetter joined but the chairman then preferred an external candidate, Bloomberg News has reported.

Knof’s appointment comes 18 months after Commerzbank held unsuccessful merger talks with Deutsche Bank. One of the main ideas behind the union would have been to achieve deep cost cuts at their combined retail units thanks to massive overlaps in branches and back office.

According to Bloomberg Intelligence analyst Philip Richards, a tie-up with Deutsche Bank may still be the ultimate outcome for Commerzbank if it fails to lift profitability as a standalone entity. Commerzbank could report losses for this year and next, he said in a note earlier this month.

Knof joined Deutsche Bank only one year ago to head the German retail unit where he oversaw the merger of the two formerly separate retail divisions, which was completed in May. He also recently sought to speed up cost cuts after falling behind internal planning partly due to the coronavirus pandemic leading to a suspension of layoffs earlier this year, people familiar with the matter have said.

He told people around him last year that he was dissatisfied in his role. His role at Germany’s biggest lender will be assumed by his current boss, Deputy CEO Karl von Rohr, a spokeswoman said.

Read: Deutsche Bank Retail Head Knof Said to Be Considering Position

​Knof led the German business of the insurance company Allianz AG, where he “comprehensively digitalized the business” and “steered Allianz’ turnaround program,” according to the press release. He also worked at Dresdner Bank before it was later acquired by Commerzbank and led its retail unit in southern Germany.

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