Commerzbank Said to Cut Around 100 London Jobs, Relocate 340

By Shane Strowmatt  

Commerzbank AG (CBK) is planning to cut about 100 jobs in London and move another 340 as it concentrates foreign exchange and interest-rate trading in Frankfurt, where the bank has its headquarters.
About half of the job cuts will be contractors and the majority of permanent staff cuts will be back-office positions, according to an internal memo to employees seen by Bloomberg News. Of the 340 relocations, about 80 are front office positions, while the majority of the remaining 260 are IT contractors.
The move will cut costs by bringing the trading of standardized products at Germany’s second-largest lender closer to existing IT platforms, and moving some IT jobs to cheaper locations, according to the memo.
“London remains key to Commerzbank’s international operations and the investment bank’s offering to clients remains unchanged across all asset classes,” spokeswoman Margarita Thiel said in an e-mailed comment.
Commerzbank said in June 2013 it plans to eliminate about 5,200 staff by 2016 to cut costs and boost profits. Global banks are weighing how to
adjust their fixed-income businesses as clients hold off trading amid depressed price swings and tougher regulation.
The relocation of 80 front-office positions from London will largely be completed by the end of 2015, and approximately 260 back-office positions will be moved by mid-2016, the memo says.

‘Difficult Conditions’

The IT hub in Frankfurt will be expanded to support the larger foreign exchange and interest rate teams there and some IT positions will be relocated to central and eastern Europe as well as Singapore.
“On the one hand the eliminations are cost-related, on the other hand it’s a structural issue -- fixed income was really difficult for everyone lately,” said Stefan Bongardt, an analyst at Independent Research GmbH, who recommends clients hold Commerzbank stock.
The shares were up 1 percent at 11.26 euros as of 10:43 a.m. in Frankfurt, while the STOXX Europe 600 Banks Index rose 0.7 percent.
Revenue at Commerzbank’s fixed income and currency unit increased to 134 million euros ($155 million) in the third quarter from 122 million euros a year earlier. Despite the third-quarter revenue upturn, Commerzbank said in its interim report on Sept. 30 that income from the fixed-income and currencies division “reflected the still difficult market conditions, leading to significantly weaker income in the first nine months of 2014 compared with the previous year.”