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Commerzbank boss sees wages soar despite debts

The chief executive of Germany's second biggest bank, Commerzbank, which is still a quarter state-owned after a bail-out, admitted to a parliamentary committee he has more than doubled his salary despite the continuing debt.

Commerzbank boss sees wages soar despite debts
Photo: DPA

After suffering considerable losses during the recession, the German government granted Commerzbank an €18 billion bail-out. Only part of the money has been paid back and the bank remains 25 percent state owned.

Despite the bank not clearing its debt, and dipping in and out of financial hot water, chief executive Martin Blessing’s salary was uncapped and went from €500,000 to around €1.3 million in a year, the Süddeutsche Zeitung newspaper said on Tuesday.

The paper revealed that he was called in front of a government financial market panel last month to explain the decision, and according to one insider, “to justify his massive pay-rise.”

His argument was that the increase was not a pay-rise, per say, but that previous restrictions on his original wage had been lifted – an explanation that the Süddeutsche Zeitung said left few on the panel convinced.

Commerzbank struggled through 2011 and 2012, with the government even mulling a second multi-billion euro bailout in December last year. It remains to be seen whether investors will receive dividends from the bank – meaning that it may not have turned a profit this year.

Bank officials told a meeting in London last week it was still not certain whether interest could be paid on the tax payers’ shares.

Blessing is working on a new strategy for the bank, while industry insiders are expecting around 1,000 jobs to be cut.

The Local/jcw

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FINANCE

Germany’s Commerzbank to cut 10,000 jobs and close 340 branches

Germany's second-largest lender Commerzbank said Thursday it will cut 10,000 jobs and close 340 branches by 2024 as it grapples with a switch to online banking and cashless payment options.

Germany's Commerzbank to cut 10,000 jobs and close 340 branches

The cuts will affect one in three jobs in Germany, the Frankfurt-based lender said in a statement.

“As part of a wide-ranging digitalisation, the bank will substantially reduce its branch network from the current level of 790 to 450,” it said.

“Compared to the figures expected for 2020, costs will be reduced by €1.4 billion or around 20 percent by 2024.”

Like its crosstown rival Deutsche Bank, Commerzbank had already announced thousands of job cuts as it struggles to adapt to a reduced need for bricks-and-mortar branches.

The troubled lender had already announced 2,900 job losses over the course of 2020 and said in December it was booking €610 million in additional provisions to finance the cuts.

It was not clear whether these job cuts were included in Thursday's figure.

The lender posted a €69 million net loss in the third quarter of 2020, during which it closed 200 branches.

READ ALSO: Germany's Commerzbank to slash 4,300 jobs

At the end of September, it had 39,600 employees.

Commerzbank said it would likely end the year with a net loss for the first time since 2009.

The task of getting the bank back on track will fall to its new boss from the start of 2021, Manfred Knof, a defector from Deutsche Bank.

The proposed cuts will be discussed at a supervisory board meeting in February, it said.

Commerzbank “intends to focus and digitalise its business model, considerably reduce costs in all areas, and significantly increase its profitability by 2024,” it said.

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