Commerzbank examines thousands of job cuts to answer Andrea Orcel

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Commerzbank is considering cutting thousands of jobs as it seeks to fend off an unwanted takeover from Italy’s UniCredit, according to people familiar with the matter.

The plans, which are not yet official, were expected to be presented to the labor council in the coming weeks, the two people said. One person familiar with the negotiations told the Financial Times that the figure could be in the “low thousands”.

Germany’s new chief executive, Bettina Orlopp, is due to present an updated strategy on March 13 to show the bank can improve profits and payouts to shareholders on their own.

UniCredit, led by chief executive Andrea Orcel, has built positions in Commerzbank which has the potential to make it the bank’s largest shareholder if it receives regulatory approval.

Orcel he made no secret of his ambitions for Commerzbank, including a complete takeover of the German rival.

Commerzbank investors generally support the deal – except for the German government, which still holds a 12 percent stake after selling a 4.5 percent stake to UniCredit last year.

Analysts expect the merger to result in cost savings of billions of euros, as the expanded bank sheds similar functions.

A key point of opposition from the unions and the government was the opportunity to UniCredit holding the ax in Germany, where it now has a German branch, HypoVereinsbank (HVB).

Commerzbank officials have warned that a takeover by UniCredit could put up to 15,000 jobs on the line – an issue that has taken up a lot of political attention ahead of Germany’s federal election next month.

The possibility that Commerzbank has instigated a reduction without being taken over by the Italian bank will mark another chapter in the long-term restructuring.

Commerzbank has cut thousands of jobs and closed almost half of its 800 branches by 2021, as chief executive Manfred Knof began a turnaround effort.

The reforms helped increase operating profit and double the bank’s share price in the past three years, and in 2023 it launched the first share buyback program in its history.

But the build-up of UniCredit shares has put more pressure on the German bank to prove it can deliver better returns and value to shareholders as a private company than the state-owned Italian bank.

Germany’s second largest listed bank has struggled to cope with higher costs than its rivals, including HVB. Orlopp has already raised Commerzbank’s operating targets since UniCredit approached in September.

Even some insiders have expressed doubts about whether Commerzbank can hope to present an independent case that would give shareholders more value than the merger, given the potential business relationship.

One person with knowledge of the matter suggested that Orlopp was now planning to fast-track another overhaul that was previously considered an option for the future.

A person familiar with the discussions indicated that the job cuts could be driven by digitisation, particularly the adoption of artificial intelligence, with IT jobs being “closer” to other European countries outside of Germany.

Commerzbank said that the strategy update, due to be presented alongside its full-year results next month, is still being developed, and “we cannot rule out future discussions with the boards of directors and administrators”.