Is Commerzbank the next Deustche? Lender’s share price plunges AGAIN amid profit fears

Friday, September 30, 2016
By Paul Martin

SHARES in Germany’s second-biggest lender plunged again today amid rising fears over Europe’s banks.

By LANA CLEMENTS
Express.co.uk
Fri, Sep 30, 2016

Commerzbank stock is down by almost 11 per cent this week, after tumbling around four per cent today.

It comes after the German giant yesterday announced it is cutting a staggering 10,000 jobs, in a desperate effort to stem costs and maintain profits.

The lender shocked investors further with plans to axe its shareholder dividend payment for the first time ever.

Eurozone banks are struggling to generate profits after the European Central Bank (ECB) cut interest rates below zero to try to kick-start the economy.

Michael Hewson, chief market analyst at CMC Markets UK, said: “A very competitive banking sector and a low and negative interest rate environment is making it very difficult for banks across Europe to generate enough profits to meet their costs, hence the large scale job losses being announced.

“The banks are also having to deal with numerous legacy issues which are a drain on profitability as well which isn’t helping.”

Commerzbank’s job cuts amount to around a fifth of its 45,000 workforce.

The firm said it would try to create 2,300 roles in areas in growing parts of the business, so that the net reduction of job losses would stand at 7,300.

Commerzbank said the huge restructure will cost €1.1billion (£995million) and is aimed at making profits more sustainable by 2020.

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