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Commerzbank to cut another 3,100 jobs by 2004

FRANKFURT: Germany's Commerzbank said on Monday it would axe an extra 3,100 jobs by 2004, more than at first planned, as part of efforts to return to profit amid the most relentless slump the country's banks have suffered in decades.

The cuts come on top of 4,300 the bank said it would implement until the end of next year, and are aimed at reducing its bloated cost base by 688 million euros ($740 million) over two years.

The cutback at Germany's third-largest listed bank is higher than first indicated last November, when it said it may slash another 2,000-3,000 jobs.

"With our Cost Offensive Plus we must make ourselves more fit and trim so that we can achieve our goal of getting back into the black this year," Commerzbank Chief Executive Klaus-Peter Mueller said in a statement.

Commerzbank shares underperformed a weak European banking sector, trading down six percent at 6.20 euros by 1321 GMT and valuing the bank at around 3.5 billion euros, a fraction of its book value.

Analysts remained cautious on Commerzbank's aim of making a profit this year after a loss of 298 million euros in 2002, its first-ever annual loss.

"There is some leverage in cost cutting, but that's very likely to be offset by weak revenues," said Didier Valet, an analyst at SG Equity Research, who rates the stock "neutral".

Like its rivals, Commerzbank suffers under a rising tide of failures among small to medium-sized corporate clients - also known as the Mittelstand - as a result of the weakness of Europe's biggest economy.

With its huge retail branch network, the bank has business relationships with some 40 percent of the Mittelstand, which forms the backbone of the German economy.

The Frankfurt-based bank said 1,500 of the additional 3,100 cuts would be made at the bank's headquarters and at central operations such as information technology and back offices.

The remaining cuts will hit Commerzbank's foreign branches and units, where 1,100 jobs will go, and its loss-making investment banking arm Commerzbank Securities (ComSec).

Commerzbank has around 35,000 staff, 29,000 of whom work in Germany.

The bank said 460 million euros of the 688 million in planned cost cuts would be implemented this year. The cutbacks are aimed at bringing annual costs to below five billion euros this year from 5.15 billion in 2002 and to 4.5 billion in 2004, which would put costs back at their level in 1999.

Detailing its 2002 results, Commerzbank unveiled its ComSec investment bank and its asset management business as its biggest loss makers with pre-tax losses of 348 million euros and 330 million respectively.

Retail banking posted a pre-tax loss of 44 million euros, while its corporate clients business posted a profit of 440 million, down 45 percent from the previous year.

Commerzbank said its supervisory board on Monday approved the appointment of two young executives to its management board, Eric Strutz, 38, who will take over as chief financial officer, and Nicholas Teller, 43, who will be in charge of corporate clients.

The two replace finance chief Axel Freiherr von Ruedorffer, 61, who is due to retire in May, and Michael Paravicini, who oversaw information technology until he left last December to join Swiss insurer Zurich Financial.-Reuters