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FINANCIAL CRISIS

US cities got €18.5 billion from German banks

Germany's biggest banks have been lending US cities money to the tune of around €18.5 billion. Bankrupt Detroit, it emerged on Monday, has been on of the main recipients, causing concern for Commerzbank.

US cities got €18.5 billion from German banks
Photo: DPA

Unlike in Germany, cities and towns in the US can declare insolvency. And after Detroit did just that, financial supervision group Bafin looked at how much money German banks and insurance companies have been lending their transatlantic friends of late, the Frankfurter Allgemeine Zeitung reported on Monday.

Eurohype, a subsidiary of Germany’s second largest bank Commerzbank, lent €310 million to Detroit alone in the run up to it declaring bankruptcy this month. A large part of this has already been written off, in another blow for the ailing German business.

In general, the European powerhouse has been increasingly reluctant to lend money stateside since the financial crisis.

The €18.5 billion lent by German banks and insurers is a lower figure than was once usual. Three years ago Germany was lending the US a fifth more than that, according to Bafin.

At the end of March this year, German companies had €37 billion in outstanding credit to the US, this is 11 percent less than three years ago, wrote the paper.

The Local/jcw

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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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