Commerzbank Extends Losses as CEO Zielke Eyes Jobs, Dividend

  • Germany’s Handelsblatt reported overhaul plans on Monday
  • Commerzbank will hold an investors day in London on Oct. 4.

Commerzbank AG extended losses after a media report that the lender plans to eliminate 9,000 jobs and suspend dividend payments as part of an overhaul under new Chief Executive Officer Martin Zielke.

The shares declined 3.1 percent to 5.86 euros at 3:32 p.m. in Frankfurt after dropping as much as 4.4 percent on Monday. The 38-member Bloomberg Europe Banks and Financial Services Index slipped 1.3 percent. The measures will be implemented by 2020 and cost as much as 1 billion euros ($1.1 billion), Handelsblatt reported on Monday, without saying where it got the information.

Martin Zielke

Photographer: Martin Leissl/Bloomberg

Zielke, 53, has been under pressure to reverse a slump in earnings that forced him to scale back full-year profit goals, hurt by negative interest rates and volatile markets. Germany’s second-largest lender has eliminated some 5,200 jobs under a program announced under previous CEO Martin Blessing designed to lower costs and resume dividend payments.

“In a negative rates environment, you need to do something,” said Andreas Plaesier, an analyst at Warburg Research with a hold recommendation on the shares. “But there’s not much you can do -- cost reductions are the obvious choice.”

At Deutsche Bank AG, CEO John Cryan also suspended dividends as part of an overhaul announced last year to boost profitability and capital buffers. Commerzbank earlier this year paid a dividend of 20 cents per share for 2015, its first payout since 2007. It is expected to pay a dividend of 30 cents per share for this year, according to the Bloomberg Dividend Forecast.

The restructuring plans still need approval from the non-executive supervisory board and may be presented on Friday, according to Handelsblatt. Germany’s second-largest bank, which is partly owned by the government, plans to inform investors about Zielke’s strategy at an investors day in London on Oct. 4. A spokeswoman declined to comment.

Commerzbank employed about 50,000 people at the end of June. The Frankfurt-based lender is scheduled to release third-quarter earnings on Nov. 4.

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