Saturday, January 01, 2022
No illusion with corporate restructuring
Knof: Coba is in the middle of the marathon
In his first year in office, Commerzbank boss Knof cleared the balance sheet and tightened the austerity program. The manager is persistent on the way back on the road to success. He is also aware of this: the financial institution still has the longer way to go.
With yoga or strength training in the early morning, Manfred Knof gets the energy for one of the most challenging jobs in the German financial sector: the realignment of Commerzbank. For a year now, the CEO has been trying to get the Frankfurt Institute back on the road to success. As head of the German insurance company Allianz, Knof had already earned a reputation as a renovator.
At Commerzbank, which was relegated to the MDax before his time, the manager lost no time after moving from Deutsche Bank on January 1, 2021: Knof cleared the balance sheet and tightened the austerity course – including thousands of job cuts and a clear cut in the branch network. “Anyone who knows me knows that I will be very persistent. I am not satisfied with half measures,” emphasized Knof in February in Frankfurt when he presented the balance sheet for the 2020 financial year, for which his predecessor Martin Zielke was still responsible .
The implementation of “Strategy 2024” together with the bank’s supervisory board and employee committees was successful, says Verdi representative Stefan Wittmann, who is also a member of the Commerzbank supervisory board. However, the austerity measures taken must be sufficient, “because it is already squeaking in some nooks and crannies and further tightening would burden the staff unduly and jeopardize the bank’s earnings,” says Wittmann. “You can also be too frugal.”
Bank should not become a takeover candidate
The Executive Board has set the goal of reducing the number of full-time positions from 39,500 to 32,000 by the end of 2024. The branch network in Germany will be reduced from 790 to 450. Knof admitted: “Of course, it is not enough to shrink and cut costs.” His primary goal: Commerzbank should not – as so often in the past – become a takeover candidate.
It is a matter of “creating all the prerequisites for Commerzbank to remain independent,” emphasized the CEO at the “Economic Summit” of the “Süddeutsche Zeitung” in November. And most of all, Knof would like to plan the future without the state. “As a private bank, we believe that it is of course better if we are also independent later and if the state will certainly go out again at some point,” said Knof at the “economic summit”.
The federal government had saved Commerzbank, which had swallowed the troubled Dresdner Bank in the middle of the financial crisis, from collapse in 2008/2009 with more than 18 billion euros in taxpayers’ money. The bank repaid the state aid years ago, but the federal government is still the largest shareholder in the institute with 15.6 percent. According to some observers, the fact that the FDP now leads the Ministry of Finance increases the likelihood that the federal government will sell its block of shares. After all, the Liberals have repeatedly spoken out in favor of the state withdrawing from Commerzbank.
“But it is definitely too early to jump for joy”
According to unconfirmed media reports, the financial investor Cerberus, who is already involved in Commerzbank, is interested in taking over the state stake. The biggest catch in a sale from the federal point of view: the share package is only worth a fraction of the 5.1 billion euros that it once cost. Balm for the shareholders who have been battered for years: Commerzbank should end 2021 in the black. “Despite the renovation costs (…) we expect a positive group result for the year as a whole,” Knof announced at the beginning of November.
“Should Commerzbank AG manage to distribute dividends to its shareholders again in 2022, that would in any case be a very positive signal,” says investor attorney Klaus Nieding, Vice President of the German Association for Protection of Securities Holdings (DSW). “But it’s definitely too early to jump for joy.” Commerzbank will “have to master decisive challenges in the coming years in order to fight its way back into the top league of big banks”, predicts Nieding. CEO Knof has no illusions on this issue, as he said at the beginning of November: “We still have the longer way to go. We are in the middle of a marathon.”