Commerzbank Aktiengesellschaft (CZB)
Due to the recent media coverage on Commerzbank's strategy, the Bank announces that the Board of Managing Directors has submitted a draft of the new strategy to the Supervisory Board. The Supervisory Board meeting in which this proposal is due to be discussed is scheduled for 3 February 2021. After that the strategy is to be decided upon by the Board of Managing Directors. So far, no decisions have been taken on any item of the strategy programme.
The Bank intends to focus and digitalise its business model, considerably reduce costs in all areas, and significantly increase its profitability by 2024. Going forward, the Bank will consistently put profitability before growth, in particular when it comes to the efficient use of capital or adequate pricing of products and services.
As part of the Group's restructuring, there will be a significant headcount reduction. Commerzbank will reduce approximately 10,000 full-time equivalents in gross terms. In Germany, this will affect every third job. As part of a wide-ranging digitalisation, the Bank will substantially reduce its branch network from the current level of 790 to 450 and significantly expand its digital offerings for its customers.
As a result of the restructuring, Commerzbank targets a Return on Tangible Equity (RoTE) of 6.5 to 7 per cent for the financial year 2024. Compared to the figures expected for 2020, costs will be reduced by €1.4 billion or around 20 per cent by 2024. At the same time, revenues are expected to remain largely stable - excluding further growth of mBank.
Despite of the significant restructuring, the Bank targets a Common Equity Tier 1 ratio (CET 1) which is at least 200 to 250 basis points above the minimum regulatory requirements (MDA).
Commerzbank is anticipating restructuring expenses totalling €1.8 billion, which will be fully financed with existing funds. The restructuring expenses will be fully booked in the current financial year. A provision of €0.8 billion was already set aside in the financial year 2020 to cover a substantial proportion of the restructuring expenses that will be incurred. In addition, there are further €0.1 billion in provisions from 2019.
Subject to a positive decision by the Board of Managing Directors, Commerzbank will present details of the strategy and concrete measures and targets for the years 2021 to 2024 at the annual results press conference on 11 February 2021. A capital markets day will also be held for investors on the same day.
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