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Commerzbank Reach Deal With Employee Representatives On Job Cuts

Commerzbank (CRZBY.PK) and the employee representatives have agreed on headcount reduction, allowing the German lender to cut thousands jobs globally.

The labor union Verdi said in a statement that the agreement includes early retirement and reduced hours for older employees, with a focus on those born in 1968 and earlier.

The Bank said it is planning to reduce the number of full-time positions by around 10,000 in gross terms by 2024. This compares with an increase of around 2,500 full-time equivalents. This will reduce the costs for external service providers alongside other benefits. Overall, it will result in a net reduction of around 7,500 positions.

The company said in January that it would reduce about 10,000 jobs by 2024. In Germany, every third job would be affected. The company would also reduce branches to 450 locations across Germany from the current level of 790, as part of its restructuring.

The Bank said Friday that it intends to implement the headcount reduction primarily through retirement arrangements, such as partial retirement or early retirement. As part of the arrangement, the Bank has extended the offer of early retirement to seven years. Furthermore, termination agreements and support for employees with perspectives inside and outside the Bank have been agreed.

The Bank noted that it will book provisions for additional restructuring expenses of around 225 million euros for retirement arrangements that were expanded beyond the scope of the original plan.

Commerzbank now projects total restructuring expenses amounting to slightly above two billion euros. Out of those expenses, more than 900 million euros were already booked in the last two business years. At the beginning of April, the Bank set aside further provisions in the amount of around 470 million euros for the first quarter of 2021. The remaining expenses for the headcount reduction will be booked in the second quarter.

The bank noted that it intends to carry out a review on the status of the agreed headcount reduction in 2023. If it emerges that the measures have proved inadequate, the Bank will discuss necessary additional measures with the employee representatives in the first quarter of 2023.

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