German lender Commerzbank AG (CRZBY.PK) on Friday forecast a net loss for the second quarter of 2017, citing higher than expected restructuring charges related to the implementation of Commerzbank 4.0 strategy. Despite the higher restructuring charges, Commerzbank added that it does not expect to report a negative net result for financial year 2017.
As part of the Commerzbank 4.0 strategy announced in September 2016, the bank said it will concentrate on its core businesses, and digitalise 80 percent of relevant processes. Its business will be focused in two customer segments, “Private and Small Business Customers” and “Corporate Clients”
While reporting its first-quarter financial results in May, Commerzbank noted that it would take some time for its growth to be sufficient to significantly outweigh the burden resulting from the negative interest rate environment.
The bank said Friday that its negotiations with the employees’ representatives are well advanced regarding the implementation of the Commerzbank 4.0 strategy. However, required decisions by the Group and Central workers’ councils are still pending.
Based on the current status of talks, Commerzbank expressed confidence that an overall balance of interests agreement between employees and employers and a severance scheme agreement could be reached shortly.
Accordingly, Commerzbank expects to book restructuring charges of about 810 million euros in the second quarter, up from the originally planned 550 million euros for 2017 and 2018 respectively.
Commerzbank noted that the provision would cover the full restructuring charges required to realize the personnel reductions for the implementation of the Commerzbank 4.0 strategy. The company does not expect further charges.
Due to weaker markets, the bank anticipates a lower operating result in the second quarter compared to the first quarter 2017. However, the CET1 ratio in the quarter is expected to be higher than 12.5 percent.
In May, Commerzbank reported a 28…