FRANKFURT (Reuters) – Germany’s Commerzbank (CBKG.DE) said on Thursday that management and employee representatives had hammered out guidelines for job cuts that were announced last year as part of a major restructuring.
At that time, Commerzbank announced it would merge its four main business segments into two, pledged to make 80 percent of its workflow digital, and said it would slash its workforce.
Thursday’s deal between management and labor marks significant progress on the bank’s goal of reducing headcount to 36,000 employees by 2020, down from 43,000 at the end of 2015.
The two sides agreed layoffs would be used “only as a last resort”. Instead, staff reduction will focus on early retirement, termination with severance packages and reduced work hours.
Commerzbank said it aimed to complete details of negotiations by the end of 2017.
“The personnel reductions are painful for the bank and those affected,” Bettina Orlopp, board member responsible for human resources, said. “However, they are necessary in order to make the bank fit for the future.”
Commerzbank was hit hard by the financial crisis and received an 18 billion euro ($20.5 billion) state bailout. Berlin still holds a stake.
Ultra low interest rates continue to keep pressure on the bank’s earnings potential.
Commerzbank reiterated that it would book job-related restructuring charges of about 810 million euros in the second quarter.
The bank has warned that the expected charges, coupled with weak markets, would cause it to post a loss in the second quarter.
The bank is scheduled to release its earnings on Aug. 2.
Reporting by Tom Sims; Editing by Maria Sheahan