Commerzbank AG (CRZBY - Free Report) is planning to cut in excess of 7,000 jobs and shut down about 400 branches, per Bloomberg. The company is mulling these cuts in response to the shareholder criticism over its inadequate pace of cost cutting.
The job cut and branch-closure plan have been received with skepticism within the company as some executives are of the opinion that cuts of such a scale are not feasible. Moreover, the labor representatives, who occupy half of the seats in the bank’s supervisory board, will likely object to the job cuts.
The company’s chief executive officer Martin Zielke’s track record with regard to cost cutting has not been satisfactory. In a plan announced four years ago, the company said that it would cut net 7,300 jobs but had ended up shedding only 3,600.
Notably, the company expects that the closure of branches will allow it to focus more on its digital channels. This is because more and more people are adopting digital channels as the coronavirus pandemic has resulted in a shift in consumer behavior.
A spokeswoman for the company said “We plan to disclose the details of our cost project the latest with our Q2 numbers. Currently, different options and scenarios are being discussed. No decisions have been taken.”
The company informed in February that it was working on more cost cuts as its previous cost cutting plan did not meet the investors’ expectations.
Shares of Commerzbank have gained 8.6% over the past three months compared with the industry's rally of 4.9%.
Currently, the company carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The coronavirus pandemic has compelled a number of companies to consider job cuts as a cost-control measure. HSBC Holdings (HSBC - Free Report) has resumed its plans to cut 35,000 jobs, which had been suspended earlier. Royal Bank of Scotland (RBS - Free Report) is likely to slash about a quarter of the company’s jobs in its investment banking unit in the United States. Moreover, the banking arm of Mitsubishi UFJ Financial Group (MUFG - Free Report) is planning to reduce its staff by an additional 2,000 jobs by fiscal 2023.
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