Commerzbank scraps pension plan
GERMANY'S third-largest bank, Commerzbank, is to stop paying into company pension schemes for its 26,000 staff in Germany as part of its cost-cutting drive.
It is the first German bank to take such a step, and banking sources said it would save e20m (£15.3m) to e30m (£23m) a year from the move. The bank blamed the cuts on difficult economic conditions.
Annual savings of up to e30m would be just a fraction of its entire budgeted costs of about e4.5bn for this year, and analysts said the move would not lure potential buyers to the long-standing takeover candidate.
'The bank is taking advantage of the fact that the job market currently favours employers. However, the savings do not seem as big as to make a takeover more likely,' said Alexander Plenk, an analyst at Bankgesellschaft Berlin.
Commerzbank's surprise move comes as the German government seeks to overhaul the state pension system, part of its high-profile spate of reforms.
The bank's decision to shelve its company pension scheme from 2005 contrasts with the government and financial industry, which are trying to encourage people not to rely solely on a state pension and to take up additional corporate or private schemes.
Employee representatives said they are exploring all legal means to halt the plans to shelve the pensions programme.
Supervisory board member Uwe Foullong from the Verdi Union complained that board members' pension schemes would not be affected and cast doubt on whether such a deal could go through.
Dresdner and Deutsche Bank both said they had no plans to reduce or ditch their pension schemes.
Commerzbank has been a takeover target for years because of its relatively low market value due to poor profitability. In November, it was forced to raise e760m in fresh funds after admitting huge losses on the value of investments and businesses, which sent it deep into the red.
The revelations that it had written down its equity portfolio, British fund manager Jupiter and Eurohypo mortgage business by e2.3bn removed an obstacle to any takeover attempt.
