Commerzbank does not present a good picture, to put it mildly. On Friday the bank announced that its CEO Martin Zielke and Chairman of the Supervisory Board Stefan Schmittmann will resign (here are all the details). Apparently, US financial investor Cerberus (the hellhound) has continued to exert pressure behind the scenes after a letter from Cerberus was announced back in June, clearly expressing dissatisfaction with the management of Commerzbank.
The downfall of Commerzbank
With a stake of over 5 percent, Cerberus is a major shareholder of Commerzbank (here the ownership structure). However, it is not a heavyweight that can independently corner the Supervisory Board and the Board of Managing Directors. Presumably other equally dissatisfied shareholders also took part in the uprising against the management? What’s up at Commerzbank? You do not have to be a fortune teller. The cutbacks in personnel and branches (further reducing costs) are likely to increase significantly again!
Mr Zielke’s results were indeed quite modest. The merger with Deutsche Bank failed (whether it would have had any positive effects at all?). And despite years of restructuring, there are mini-gains, and even recently losses again. Not fish, not meat! Even the German state, as a major anchor shareholder since the financial crisis, is unlikely to be happy with this development.
In the end, are perhaps all those involved happy that a pale Mr Zielke is disappearing? The bill should be paid by the ordinary employees. Let us guess (with a good chance of hitting the mark?): Internal departments and processes are outsourcing to Poland, Hungary, or straight to India? This has been seen at numerous banks and financial service providers in Europe in recent years. Because this saves a lot of money! In Mr. Zielke’s defence, however, we may also mention: After the abolition of the interest margin by the ECB, his job was a damn dreadful one.
Significantly underperforming the general market
Please look at the following chart. Since 2004, it shows the decline in the Commerzbank stock. At the same time, the Dax (blue line) has performed magnificently. Even after the recent stock market crash from March onwards, the general market clearly outperformed the Commerzbank share.