Commerzbank eyes thousands of job cuts in strategy revamp: sources

September 22, 2016 9:28 AM EDT

A Commerzbank logo is pictured after the bank's annual news conference in Frankfurt, Germany, February 12, 2016. REUTERS/Ralph Orlowski/File Photo

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FRANKFURT (Reuters) - Commerzbank CBKG.DE is planning to cut thousands of jobs as it revamps its strategy to contend with the drag on earnings from ultra low interest rates and lackluster demand for loans, sources familiar with the bank's thinking said.

The figure is likely to be substantially higher than the 1,500 jobs that were under recent internal discussion, the sources said.

Commerzbank, Germany's second biggest bank, employs more than 50,000 people.

Group-wide, as many as one in 10 staff could lose their jobs, one of the sources said. "A reduction of 5,000 is entirely plausible," the person said.

That would compare with peer Deutsche Bank DBKGn.DE, which plans to trim 9,000 of its 100,000 staff, including 4,000 in Germany.

Commerzbank warned on Aug. 2 that earnings would fall this year, knocking its shares to a record low.

The focus in recent media reports has been on job losses stemming from what sources previously said would be a major restructuring of Commerzbank's division working with medium-sized companies.

However, one of the sources cited internal calculations that there were around 2,000 too many people in centralized back office functions.

The extent of the cuts is not yet finalised but Commerzbank Chief Executive Martin Zielke is expected to present the plans to a meeting of the bank's supervisory board next week.

Commerzbank declined to comment.

Squeezed by negative European Central Bank interest rates, German banks have been seeking ways to increase revenue by passing on costs to corporate customers and increasing fees for retail depositors, but profit margins remain thin.

That leaves cost cutting high on the agenda for German lenders.

Sources briefed on Commerzbank's plans told Reuters earlier this month it was considering separating its business with smaller corporate customers from that dealing with companies of the Mittelstand, the medium-sized businesses that form the backbone of Germany's economy.

Small firms would in the future be served by Commerzbank's retail unit, while large corporates would be served from a unit comprising the rest of its Mittelstandsbank (MSB) and Commerzbank's investment bank, those sources added.

Such moves were seen as likely to have a significant impact on staff numbers at Commerzbank,

The drive toward digital banking alone could see about 1,000 positions trimmed, the people familiar with the bank's thinking sad.

The retail bank, which Zielke headed before becoming CEO in May, cannot expect to be spared, either, they said.

(Reporting by Andreas Kroener, Alexander Huebner, Arno Schuetze, Kathrin Jones and Jonathan Gould; Editing by Harro ten Wolde)

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