FRANKFURT (Reuters) - Commerzbank (DE:CBKG) no longer expects a rise in underlying revenue this year, the German lender warned on Thursday, as its supervisory board approved plans announced last week to cut thousands of staff and close a fifth of its branches.
The bank, partly owned by the German government after a bailout, is undertaking the strategy overhaul after its attempt to merge with Deutsche Bank (DE:DBKGn) failed.
It also said on Thursday that board member Bettina Orlopp would succeed Stephan Engels as chief financial officer, while Sabine Schmittroth would become board member responsible for human resources.
"Over the course of 2019, the market environment has continued to deteriorate further. This has been particularly evident in the corporate clients business," Commerzbank said, explaining the downgrade in its revenue expectations.
The supervisory board also approved plans to sell a stake in the bank's Polish subsidiary mBank (WA:MBK) and absorb its Comdirect online brokerage unit.
The lender flagged the strategic overhaul last week.
The measures were approved by the board during a two-day meeting.
Among the plans, the bank will cut 4,300 jobs in some places but add 2,000 jobs in "strategic areas", so the group headcount will fall in total by about 2,300 full-time positions, equivalent to about 5.7% of its workforce. It now employs about 40,700 people.
Commerzbank said the strategy would involve investment of 1.6 billion euros ($1.8 billion), with 750 million euros going into new technology and the rest earmarked for restructuring.
Germany's banks have been battling a legacy of bad debts, bloated workforces and fines a decade after the global financial crash. Commerzbank had already been reducing staff and is trying to cut back-office work to restore profitability.
Its restructuring plan is negative for the German lender's credit rating, ratings agency Moody's has said.
The agency said plans to sell mBank would "further limit the bank's growth potential given that mBank meaningfully contributed to the group's revenue and profits, and its growth".