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Commerzbank predicts massive recession

Economists at Germany’s second largest bank, Commerzbank, said on Monday the country would experience the worst recession in modern memory this year, as the economy contracts up to 7 percent.

Commerzbank predicts massive recession
Photo: DPA

“We now expect that the German economy in this year won’t just shrink by three to four percent, but by six to seven percent,” the bank’s chief economist Jörg Krämer said in a statement emailed to clients.

He cut a previous estimate of a three to four percent contraction to six to seven percent after “January order intake and production data plunged at a dramatic pace that has no precedent in Germany’s post World War II history.”

Industrial orders in Europe’s biggest economy dropped by 8.0 percent in January from the previous month, according to an estimate from the economy ministry, while industrial output slumped 7.5 percent in January from December.

Europe’s largest economy is already facing the most dramatic recession since the Second World War as the global economic downturn slashes demand for German exports.

German Finance Minister Peer Steinbrück warned last week that the government might cut its 2009 forecast again from the current outlook for a 2.25-percent contraction.

Steinbrück told the daily Süddeutsche Zeitung: “I cannot say just how low it might go.”

Commerzbank also predicted that other European Union countries and the US would have to reduce their GDP expectations.

FINANCE

Germany’s Commerzbank to cut 10,000 jobs and close 340 branches

Germany's second-largest lender Commerzbank said Thursday it will cut 10,000 jobs and close 340 branches by 2024 as it grapples with a switch to online banking and cashless payment options.

Germany's Commerzbank to cut 10,000 jobs and close 340 branches

The cuts will affect one in three jobs in Germany, the Frankfurt-based lender said in a statement.

“As part of a wide-ranging digitalisation, the bank will substantially reduce its branch network from the current level of 790 to 450,” it said.

“Compared to the figures expected for 2020, costs will be reduced by €1.4 billion or around 20 percent by 2024.”

Like its crosstown rival Deutsche Bank, Commerzbank had already announced thousands of job cuts as it struggles to adapt to a reduced need for bricks-and-mortar branches.

The troubled lender had already announced 2,900 job losses over the course of 2020 and said in December it was booking €610 million in additional provisions to finance the cuts.

It was not clear whether these job cuts were included in Thursday's figure.

The lender posted a €69 million net loss in the third quarter of 2020, during which it closed 200 branches.

READ ALSO: Germany's Commerzbank to slash 4,300 jobs

At the end of September, it had 39,600 employees.

Commerzbank said it would likely end the year with a net loss for the first time since 2009.

The task of getting the bank back on track will fall to its new boss from the start of 2021, Manfred Knof, a defector from Deutsche Bank.

The proposed cuts will be discussed at a supervisory board meeting in February, it said.

Commerzbank “intends to focus and digitalise its business model, considerably reduce costs in all areas, and significantly increase its profitability by 2024,” it said.

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