Restructuring costs push Germany's Commerzbank to loss

FRANKFURT: Germany's second-largest lender Commerzbank posted a huge loss for the second quarter on Wednesday, as it covered the costs of letting employees go and closing high-street branches.

The bank's loss reached 527 million euro ($626 million), as it booked 511 million euros worth of restructuring costs in its bid to digitise its operations and return to profitability.

"The implementation of the strategy is right on track," Commerzbank chief executive Manfred Knof said in a statement.

Commerzbank beats expectations

"We are driving all strategic initiatives forward and we are also ready to make tough decisions if necessary."

Like other banks, Commerzbank's earnings have been pummelled by years of ultra-low interest rates.

After net losses of 2.9 billion euros last year -- the first since 2009 -- the bank said it expected to be back in the black this year.

That drive will include cutting staff levels to 32,000 by the end of 2024, down from nearly 40,000 at the end of last year.

Its network of bank branches will be halved to about 450 sites across Germany.

Revenues for the quarter were down by 18 percent on the previous year to 1.86 billion euros.

Several one-off items also had a negative impact.

Commerzbank put aside 66 million euros to reimburse customers after a German Federal Court of Justice (BGH) ruling in April, which found that banks did not have the right to introduce checking account fees by assuming silent consent from customers.

The verdict has far-reaching consequences for Germany, where millions of retail bank customers can now claw back the fees. A further 55 million euros was set aside by Commerzbank to cover the Swiss franc loan portfolio of mBank, a Polish subsidiary.

Like other banks, Commerzbank's earnings have been pummelled by years of ultra-low interest rates.

The German government still holds an around 15-percent stake in the bank which it bailed out during the 2008-2009 financial crisis.