Commerzbank’s New CEO Now Must Apply His Cost-Cutting Skills

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Commerzbank AG’s new chief executive officer, hired for his no-nonsense approach to cost cutting, will soon get a chance to burnish that reputation.

Manfred Knof’s first task when he takes on the role on Jan. 1 will be to review and eventually approve the strategy that Commerzbank has been working on all year. As things stand, the company plans to do away with about 10,000 jobs, the vast majority of its branches, and big chunks of its foreign operations, Bloomberg News has reported.

Knof will be under pressure from Commerzbank’s two largest shareholders -- the German government and Cerberus Capital Management -- to improve the company’s performance after previous attempts to rein in costs failed. He will also have to contend with resistance from the bank’s powerful unions.

In hiring Knof, 55, from Deutsche Bank AG, Supervisory Board Chairman Hans-Joerg Vetter passed over two internal candidates: Chief Financial Officer Bettina Orlopp and corporate-clients head Roland Boekhout. Vetter wanted someone with few internal attachments, people familiar with his thinking said. He declined to comment through a spokeswoman.

“The appointment should be taken positively,” Jefferies analyst Martina Matouskova wrote in a note Monday. Knof digitalized the insurance business at another former employer -- the German unit of insurance company Allianz SE -- and delivered cost savings that involved tough negotiations with labor unions, Matouskova said in the note. “This level of experience will be required to deliver the expected ambitious plan,” she said.

Vetter settled on Knof after other potential candidates signaled they weren’t interested in the job, Bloomberg News has reported. Knof has never had a seat on the management board of a publicly listed company and he’s joining a company that hasn’t appointed an external CEO in almost three decades.

“I have a great deal of respect for this new assignment,” Knof was quoted as saying in a press release Saturday. “Commerzbank has a unique culture that I am very much looking forward to.”

Potential Departures

In addition to navigating outspoken stakeholders with conflicting interests, another risk facing Knof is the potential departures of Orlopp and Boekhout after they were overlooked for the CEO job, Citi analysts led by Nicholas Herman wrote in a note Monday. Any such move would add further turmoil at the top of the company after the recent resignation of retail head Michael Mandel.

During his one-year stint at Deutsche Bank, Knof merged the bank’s two domestic retail units, renegotiated several big vendor contracts at better terms and made an announcement to close 100 branches. However, he also fell behind internal headcount reduction targets, largely because the bank stopped layoffs during the height of the pandemic in March and April, Bloomberg News has reported.

People who know him also credit Knof with boosting performance at Allianz’s German unit and cleaning up its Russian operations during his time at the company. Knof flew to Russia, protected by bodyguards, to personally shut down parts the unit, the people said. He declined to comment through another spokeswoman.

Knof hasn’t always got on well with his managers, though. He left Allianz in 2017 after clashing with his boss, CEO Oliver Baete, people familiar with the matter said. He also considered his position at Deutsche Bank last year when he felt he lacked the authority to carry out the necessary strategic changes, Bloomberg News has reported.

“Some colleagues say I’m pretty impatient,” Knof responded in an interview conducted by a student at European Business School when asked about his weaknesses. “I’m not the best networker or fundraiser; I definitely don’t play golf with colleagues or something just for networking reasons.” Asked how he would describe his lifestyle, Knof said, “Work hard and play hard.”

©2020 Bloomberg L.P.

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