Commerzbank losses spur job cuts and management revamp

Commerzbank posted a third-quarter loss and will cut 900 jobs as it scales back its loss-making investment bank.

Commerzbank posted a third-quarter loss and will cut 900 jobs as it scales back its loss-making investment bank.

Klaus-Peter Mueller, the chief executive, also announced a reshuffle of the group's management board, and said the bank is open to a potential merger with a rival. He said: "We continue to be open to all reasonable offers."

The German bank reported a net loss of €208m (£145m) yesterday for the three months to September, disappointing analysts who had expected a net profit of about €103m. The pretax loss amounted to €121m, compared with €2.3bn a year ago. A major revamp of the global investment banking business resulted in a €132m charge to help cover the cost of cutting its London workforce by about half to 300, shutting the unit's Tokyo office and slashing its New York staff by three-quarters.

Mr Mueller said: "The situation in our securities unit is still dire. Despite challenging market conditions, there is no acceptable excuse for the operating loss" of €171m at the investment banking division in the third quarter. He said the bank would make a fresh start in investment banking, which will focus on derivatives and structured products and is expected to be profitable again in the fourth quarter.

The unit is being merged into a new corporates and markets division and will be headed by Nicholas Teller, who is currently in charge of corporate banking. He replaces Mehmet Dalman, the former head of the securities division, who quit in September to start his own hedge fund business.

Commerzbank plans to scrap many of the pan-European equity broking and proprietary trading operations within the securities division - after posting a trading loss of €9m in the quarter - and is going to scale back the research department.

The German bank also moved Achim Kassow, the head of its online brokerage Comdirect Bank, to take over the running of retail banking from Martin Blessing, who will oversee a new division for small and medium-sized companies, known as the Mittelstand.

The third-quarter loss means that Commerzbank made a net profit of just €294m in the first nine months of this year, making it tough to reach its full-year goal of about €800m. In the medium term, the bank aims for annual profits of €1bn.

Commerzbank had its credit ratings affirmed yesterday after announcing its results. Fitch Ratings welcomed the downscaling of the investment banking division, adding: "Underlying financial performance is showing a positive trend, as most of the bank's other divisions are benefiting from the cost savings and restructuring measures undertaken in the past two years."