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Tags: Germany | Commerzbank

Commerzbank Shares Jump after CEO, board Chair Quit

Monday, 06 July 2020 07:39 AM EDT

FRANKFURT, Germany (AP) — Shares in Germany's struggling Commerzbank rose more than 8% on Monday in the wake of the resignation of the bank's CEO and board chairman under pressure over the bank's sagging profits and stock price.

CEO Martin Zielke and board chair Stefan Schmittmann submitted their resignations on Friday. Zielke said that the bank's financial performance had been “unsatisfactory” and that the bank needed “a profound transformation and a new CEO.”

Shares rose to 4.45 euros in early afternoon trading in Europe.

Media reports indicate the bank's management has been criticized by U.S. private equity firm Cerberus Capital Management, the second-largest shareholder, over the pace of restructuring. The bank is reportedly considering dropping 7,000 jobs and closing branches as it struggles with low profitability. Discussions last year about a possible merger with Germany's Deutsche Bank did not lead to a deal. Commerzbank made a net loss of 295 million euros ($320 million) in the first three months of the year.

Very low or negative interest rates are one factor that can weaken profits, since they lower returns on bond holdings and squeeze margins on lending. However the European Central Bank has taken steps to ease the impact of negative rates on bank profits by exempting some of their holdings at the central bank from the official negative rate.

Job cuts “will be just the start for the bank,” wrote ABN AMRO analyst Tom Kinmonth. “Commerzbank is caught in a trap. Negative interest rates are hurting banks with low domestic government bond yields.”

Commerzbank's largest shareholder is the German government with more than 15%, a legacy of a state bailout of the bank during the global financial crisis in 2009.

© Copyright 2022 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


GlobalTalk
Shares in Germany's struggling Commerzbank rose more than 8% on Monday in the wake of the resignation of the bank's CEO and board chairman under pressure over the bank's sagging profits and stock price.CEO Martin Zielke and board chair Stefan Schmittmann submitted their...
Germany,Commerzbank
280
2020-39-06
Monday, 06 July 2020 07:39 AM
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