Commerzbank Sees First-Quarter Loss on Staff Reductions
Commerzbank AG (CBK), the German bank that got 18.2 billion euros ($24 billion) in state bailout funds, expects to report a loss in the first quarter due to the cost of firing staff.
“The first quarter of 2013 will be affected by one-off effects due to the planned job cuts,” Commerzbank said in a written statement handed out at an annual shareholders’ meeting in Frankfurt today. The lender said in March that it would incur 500 million euros of costs related to job reductions in the first three months.
Commerzbank, which is shedding staff and shutting down loss-making shipping and real estate units, is asking shareholders to approve a fifth capital increase in four years at today’s meeting as it seeks to repay a remaining 1.6 billion euros in state aid. The bank, which had a loss of 716 million euros in the fourth quarter, hasn’t paid a dividend since the financial crisis erupted in September 2008 and its shares have lost 93 percent of their value since then.
Commerzbank plans to sell shares in the capital increase between mid-May and the start of June, the lender said in the statement. By repaying the state aid, Chief Executive Officer Martin Blessing said the bank will save 200 million euros in annual interest payments.
“From our shareholders’ point of view there are many reasons for repaying the silent participation as quickly as possible,” Blessing said. “We are enhancing our future ability to pay dividends.”
Commerzbank will cut 4,000 to 6,000 positions by 2016, including 1,800 at branches across the country, the firm said in February.
The bank said it expects its core Tier 1 capital ratio, a key measure of financial strength, to be 9 percent at the end of next year.
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