Commerzbank share: Commerzbank share: Hope for dividends?

From Felix Reinecke February 2, 2021

There is a huge crunch at Commerzbank before tomorrow’s Supervisory Board meeting. The committee advises on the recently published savings plans. According to this, 10,000 full-time positions are to be cut, in Germany alone every third job would be at risk. In addition, the branch network is expected to shrink considerably; almost half of the last 790 branches would be affected by the closure.

Excitement among trade unionists

The plans are expected to meet with resistance from employee representatives. It is true that the trade unionists also realize that a comprehensive restructuring is inevitable and that this also entails the loss of jobs. Extensive negotiations had already taken place last year.

But then events rolled over, CEO Martin Zielke had to take his hat, and Manfred Knof has been running Germany’s second largest private bank since January 1st. The new boss steps up the pace. Several business areas are to be given up by 2024, and international business in particular is on the cross-off list.

However, it will hardly be possible to achieve this to the desired extent and with the tight deadlines solely through age regulations such as partial retirement or early retirement. Operational dismissals would therefore be inevitable.

Poisoned mood before board meeting

The employee representatives are therefore calling for the downsizing to be extended over a longer period of five to six years – and will therefore probably not agree to the current planning at the Supervisory Board meeting.

Nevertheless, it is expected that the strategy will be approved by the supervisory board and that its implementation will not be prevented by the union representatives, but rather slowed down. Anything else would dismantle the CEO who has just moved into office – a process that the financial institution simply cannot afford right now.

Growing dissatisfaction

The communication of the rebuilding plans is therefore also coming under criticism: Due to the advance reports last week, the supervisory board is now de facto forced to approve the plans, unionists complain. The basis of trust that the employer and employee side had previously developed in the lengthy negotiations was badly damaged as a result. Dissatisfaction grows.

However, this is also becoming a mortgage for Commerzbank, because it is not the first restructuring and savings plan that the workforce is confronted with. Since the bank had to be partially nationalized in the wake of the financial crisis, it has been fighting to return to profitability and independence, so far with moderate success. If the employees no longer go along with them because they feel they have been betrayed by the board of directors, it seems all the more difficult to implement the ambitious goals.

Commerzbank share: moderately successful

The discussions in the Supervisory Board on Wednesday tomorrow will provide a foretaste. How Commerzbank is doing and what the medium-term strategy until 2024 looks like in detail will be specified when the balance sheet is presented on February 11. Rumors of a possible share buyback program or even a dividend payment are likely to meet with approval from investors, but not from employees in view of the rigorous austerity measures.

The Commerzbank share has gained a good 5 percentage points since the beginning of the year and most recently cost around EUR 5.60. This puts it in the range of analyst ratings, the majority of whom recently advised holding the share, albeit with a rather pessimistic tendency.