Facing rising challenges from competitors like Unicredit whose potential ownership stake could reach 28% after recent moves Commerzbank has set out an ambitious industrial plan designed to secure its long-term profitability and competitive edge. The new strategy positions the bank to capitalize on market opportunities and technological advancements, laying the foundation for sustainable growth amid a slowly expanding German economy.
Workforce Restructuring and Cost Management
A central element of the plan is the reduction of 3,900 full-time jobs by 2028. This measure, predominantly impacting operations within Germany, is structured to leverage natural demographic shifts, bolstered by an early retirement program offered in collaboration with labor unions. The planned restructuring, with estimated costs of 700 million euros by 2025, will be partly offset by a focus on digitalization and the expansion of international offices, ensuring that the overall headcount remains steady at around 36,700 globally.
Ambitious Growth Targets and Dividend Increase
Commerzbank aims to achieve a profit of 4.2 billion euros and a tangible return on capital of 15% by 2028. The bank’s management, led by CEO Bettina Orlopp, remains optimistic based on strong 2024 performance net income surged by 20% to 2.7 billion euros, and operating profit climbed 12% to 3.8 billion euros. In recognition of this robust performance, the dividend will be raised to 0.65 euros, signaling confidence in the bank’s future financial health.
Expanding Market Presence and Strategic Partnerships
Beyond cost cuts, the new plan emphasizes growth through a greater focus on fee income, improved customer penetration in the corporate segment, and a strategic expansion in asset and wealth management. Commerzbank is also exploring targeted acquisitions and forging strategic partnerships to innovate its product offerings, distribution channels, and IT services. These initiatives are integral to accelerating organic growth while navigating the broader challenges of a slowly growing economy and moderate increases in costs and interest margins.
Described as both “achievable and ambitious” by management, the transformation plan reflects Commerzbank’s resolve to emerge stronger in a competitive landscape. By balancing cost efficiency with strategic investments in technology and international expansion, the bank is charting a course to not only resist pressures from rivals like Unicredit but also to seize new market opportunities.
