No quick solution to management crisis at commerzbank in sight. Even after several hours of deliberations by the supervisory board on wednesday, it remained unclear who should drive further savings at the partially nationalized frankfurt-based mdax group.
The special meeting of the control body continued in the afternoon. On friday, both group CEO martin zielke and supervisory board chairman stefan schmittmann surprisingly announced their resignations. Zielke, who has led the bank since may 2016, had offered a mutually agreed termination of his contract, which runs until november 2023, no later than the end of the current year. Schmittmann will step down from the board as early as 3. Resign august 2020.
According to the "frankfurter allgemeine zeitung", however, none of the incumbent supervisory board members wants to become the new chairman of the supervisory board. The control committee had instructed jutta donges, who had been delegated to the supervisory board by the federal government, to find a new member for the control committee, the newspaper wrote on wednesday evening. Donges is managing director of the federal republic of germany – finance agency that manages the federal government’s debts.
However, the external search for a possible new chief controller delays the further process. According to insiders, a decision on zielke’s successor will not be made until after the supervisory board has been reappointed.
Zielke and schmittmann’s withdrawal is in response to heavy criticism of the bank’s share price by investors – namely by the major shareholder cerberus. The U.S. Fund had accused the group’s management of having "blatantly failed over the years". Cerberus is the second-largest shareholder in commerzbank with a good five percent – after the german state, which has been a major shareholder with a current 15.6 percent since rescuing the bank with billions of taxpayers’ money during the financial crisis in 2009.
Cerberus warned on monday against rushing into the appointment of a new group CEO. "The sudden departure of the chairman of the supervisory board and the board of management of commerzbank requires an orderly succession process to fill the vacant positions," a representative of the u.S. Financial investor had said. "First, a new chairman of the supervisory board must be found, followed by a formal process led by the supervisory board to appoint a successor for the chairman of the board of management."
Supervisory board member stefan wittmann had told deutschlandfunk radio before the special meeting on wednesday: "i don’t think we can deal with the strategy in terms of content." Verdi representative wittmann said in the interview: "i expect today’s meeting to clarify personnel issues, to give us an outlook with a timeline of how things should proceed now, and to deal with the strategy when we know who is responsible for it."
Zielke had conceded that the cuts agreed in the fall had not been far-reaching enough to make the bank more profitable in the low interest rate environment. He wanted to clear the way for a new start: a far-reaching restructuring was necessary and for this a new CEO, "who would also be given the necessary time by the capital market to implement a strategy," said zielke, explaining his retirement.
Roland boekhout, former head of the direct bank ING-diba (now ING deutschland), who has been a member of the board of management since january, is considered to be a promising internal candidate for the position of chief executive officer (CEO). Also chief financial officer bettina orlopp. But the supervisory board could also consider external candidates.
Whoever succeeds zielke will have to push ahead with painful cuts. Plans for a drastic tightening of the savings rate presented in the fall are rumored to be on the table. The number of recently almost 40.000 full-time positions could therefore be cut by up to a quarter. The branch network is to be significantly reduced: of an original 1000 locations, just 200 could remain where customers can get advice. But foreign business is also to be scaled back – according to the motto "less mass, more class". This could cost 1000 to 1500 full-time jobs in the corporate banking sector.
Zielke himself wants to make financial concessions to the institute in the event of an early termination of his contract. The CEO had announced internally that he would forego a variable compensation of around 1.5 million euros to which he was contractually entitled when he left the company. Corresponding information from the "handelsblatt" was confirmed to the german press agency in financial circles.
Nevertheless, depending on his exact departure date, zielke will probably receive a mid-single-digit million euro sum: his contract stipulates that he will continue to be paid his annual base salary of a good 1.67 million euros until the end of the term of the contract. Commerzbank did not wish to comment on this information.