Commerzbank Signs Deal on Thousands of Job Cuts With Labor Reps

(Bloomberg) -- Commerzbank AG reached an agreement with labor representatives on deep job cuts, removing an important obstacle for Chief Executive Officer Manfred Knof as he seeks to cut costs.

The deal seeks to avoid involuntary dismissals to achieve Knof’s target of reducing the lender’s headcount in Germany by 7,600, labor union ver.di said in a press release on Friday. Instead, the bank will offer employees financial incentives to retire early or switch to part-time work.

Knof presented a four-year turnaround plan in February that’s centered around cutting about a fifth of the lender’s costs and a quarter of its domestic workforce. At the time, he also promised to quickly reach agreement on the cuts with powerful works councils.

A spokesman for Commerzbank declined to comment.

The bank said in April it has booked about 1.4 billion euros out of the 1.8 billion euros it plans to spend on the restructuring. It expects to book the remaining amount this year, likely resulting in a second consecutive annual loss.

Agreement from labor representatives on job cuts can be crucial at German companies where strong labor laws give employee representatives half the seats on the supervisory board as well as far-reaching rights to be heard in staff reduction programs.

As a result, companies frequently forgo forced dismissals, relying on financial incentives such as early retirement programs or generous severance pay to boost voluntary departures.

©2021 Bloomberg L.P.