FRANKFURT Commerzbank (CBKG.DE), Germany's second-largest lender, is considering merging its lending business to medium-sized firms into its investment bank, adding to previously announced job losses, people briefed on the plans said.
Like other banks, Commerzbank is suffering from less business borrowing, a drag on revenue from negative interest rates and a rising regulatory burden. It warned in August that its earnings would fall this year.
Under new CEO Martin Zielke, it is seeking to define a turnaround strategy, and this week picked former chief risk officer Stefan Schmittmann as its next supervisory board chairman from 2018.
The bank is 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, the people said.
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, they added.
Investment bank head Michael Reuther is expected to head the new corporate and investment bank, according to German daily Handelsblatt, which had also first reported the plans for a new structure.
Commerzbank declined to comment.
A significant number of jobs are expected to be slashed at MSB on top of the already expected staff cuts in the unit that employs around 6,000, the people said. Separately, Commerzbank's securities trading is expected to be downsized significantly, leading to jobs cuts, they added.
Commerzbank's executive board is currently working out a new strategy with the help of consultancy McKinsey. The supervisory board will discuss its blueprints at the end of the month at its annual strategic review meeting. The new strategy is to be announced on Sept. 30, one of the sources said.
(Additional reporting by Victoria Bryan; Editing by Hugh Lawson/Ruth Pitchford)