On Thursday, Commerzbank announced plans to reduce its workforce by 3,900 full-time positions by 2028, primarily in Germany, as part of its newly established strategic goals.

While the layoffs are significant, the bank also plans to increase employment in certain areas, particularly internationally, resulting in a stable global workforce of approximately 36,700 employees, according to their strategic update.

Commerzbank projects around 700 million euros (approximately $730.7 million) in before-tax restructuring costs for 2025, aiming for a net profit of 2.4 billion euros after accounting for these expenses. The bank intends to maintain a payout ratio exceeding 100% during 2025-2028, after factoring in restructuring costs and Additional Tier 1 (AT1) bond coupon payments.

In 2024, the bank’s revenue is recorded at 11.1 billion euros compared to 10.461 billion euros in 2023.

Recently, Commerzbank highlighted its “record” annual performance just two weeks prior to its scheduled financial results release, aligning with German regulations regarding significant capital returns that surpass market expectations.

During this announcement, the bank reported a 20% increase in net profit, reaching 2.68 billion euros ($2.78 billion) for 2024, exceeding forecasts. Furthermore, it outlined intentions to repurchase 400 million euros in shares and increase its dividend payout to 0.65 euros per share, up from 0.35 euros the previous year.

Since last year’s unexpected acquisition of a stake in Commerzbank by UniCredit, Germany’s second-largest bank has been advocating for its independence amidst speculation about possible cross-border mergers. UniCredit currently possesses a direct stake of 9.5% and an additional 18.5% stake through derivatives in Commerzbank.

The German government has expressed clear opposition to a potential merger, with Finance Minister Jörg Kukies criticizing UniCredit’s “very aggressive, very opaque” stance in a recent CNBC interview.

While UniCredit CEO Andrea Orcel has remained discreet about his company’s intentions regarding Commerzbank amidst talks of a potential takeover of Italian lender Banco BPM, he hinted that he sees great potential in combining the two banks.

Following UniCredit’s positive fourth-quarter earnings announcement and forecasts of a revenue slowdown in 2025, Orcel reiterated that Commerzbank is a valuable investment, expressing confidence in his ability to illustrate the substantial benefits that a merger between the banks could bring, not only for their stakeholders but also for the broader German and European markets.

This breaking news story is under continuous updates.