The axe was wielded at Commerzbank's investment banking division on Tuesday. The list of casualties, however, was far higher than even the most dire predictions.
In a radical move that will well and truly end any aspirations the German bank ever entertained of a global investment banking franchise, 900 jobs will be culled out of the total unit workforce of 2,000. 490 front office and 410 support roles are to be cut.
The bank will close its securities office in Tokyo, with the loss of around 50 jobs, and slash 75% of its 120 investment banking staff in New York. At least 300 jobs in London will go, as well as 30 in Frankfurt. It is unclear exactly where the cuts will be made, although the firm will reduce its proprietary trading and brokerage operations and cut back on research.
The division incurred a $220m loss in the third quarter. Most analysts said that the move, although painful, was the right thing for Commerzbank to do. The bank's CEO Klaus-Peter Mueller said that 'the situation in our problem child securities unit is still dire. Despite strained market conditions, there is no acceptable excuse for the operating loss'.
The unit's new focus will be on derivatives and structured products and it should return to profit in the final quarter.