FRANKFURT (Reuters) – The CEO of Commerzbank resigned on Friday, bowing to demands from major shareholder Cerberus that the German lender change its strategy to stop a downward spiral in its financial performance.
The resignations of chief executive Martin Zielke and chairman of the supervisory board Stefan Schmittmann end weeks of drama after the US private equity firm attacked Commerzbank management last month for not doing enough to shut down the decline.
150-year-old lender struggled this year, reporting first quarter loss, ending 2019 dividend plans, backtracking sale of Polish mBank unit MBK.WA, and lose a sponsorship contract for a football team to its rival Deutsche Bank DBKGn.DE, with whom he failed to merge last year.
Bailed out by the state during the last financial crisis, Commerzbank now plans to cut thousands of additional jobs and close hundreds of branches to recover.
Months before Cerberus made its complaints public, the German state, frustrated by the bank’s poor performance, replaced its two representatives on the supervisory board.
Commerzbank said a committee of the supervisory board discussed Zielke’s resignation offer on Friday and would recommend that the board accept it at a July 8 meeting.
“I would like to pave the way for a fresh start,” Zielke said. “The bank needs a profound transformation and a new CEO, who gets the necessary time from the markets to implement a strategy. “
Zielke was supposed to present a strategy update to the board this week, but the chief executive, in the lead for four years, was prevented from doing so by worker representatives.
Cerberus, which bought a 5% stake in Commerzbank in 2017, launched an activist campaign to force the lender to change its strategy and cede the American investor two seats on its supervisory board early last month. .
The US investor said on Friday he was not surprised by the resignations, although he was surprised by the timing, a person close to the investor told Reuters, adding that he would work with the government. and bank staff to fill the management gap.
The state, which owns almost 16% of Commerzbank, is its largest shareholder. The finance ministry said it was fully committed to its engagement with the bank.
“Commerzbank plays a central role in financing small and medium-sized enterprises and exports,” the ministry said in a statement.
Two of the top 10 investors said on Friday that Roland Boekhout, who recently joined Commerzbank from the ING group, would be a credible replacement for Zielke, echoing the sentiments of other bankers in recent months. Neither Commerzbank nor Boekhout responded to requests for comment.
Last year, Commerzbank wanted to merge with its biggest rival Deutsche Bank, but talks failed.
Klaus Nieding of shareholder lobby group DSW said that while Deutsche, led by CEO Christian Sewing, was able to focus on strengthening its own business, Commerzbank “on the other hand seemed rather unimaginative.”
“This led to the annoyance of shareholders,” he said.
The resignations could rekindle speculation about a merger between the two. On Friday evening, the headline of the website of a major German newspaper, the Frankfurter Allgemeine Zeitung, read: “Couture, take over! “
Reporting by Tom Sims and Hans Seidensteucker; Editing by Carmel Crimmins, David Clarke, Louise Heavens and Daniel Wallis