FRANKFURT (AFP) - Commerzbank, the fourth-biggest German bank, said it was axing 900 jobs in a revamping of its investment banking operations and posted a third-quarter net loss despite expectations for a profit.
The bank said it was restructuring its investment banking operations by combining them with corporate customers' activities and capital market products under a new division.
It said Nicholas Teller would head the new division, called Corporates and Markets.
The bank would close its investment banking operations in Tokyo while the number of jobs in New York would be cut by about 75 percent.
The number of employees in London would be reduced by about 50 percent to around 300 while in Frankfurt, 30 jobs out of 425 would be cut.
The bank said the job cuts, which represent nearly half the workforce in its investment banking business, would cost 132 million euros (170 million dollars).
The bank said its new business model would reduce its own dependence on fluctuations in the financial markets as well as improve profits overall.
It would concentrate in the future on "profitable, customer-oriented core business and at the same time divest or trim non-profitable or loss making activities."
These were mainly in its trading business or in brokerage and research, which it said would be oriented primarily on German operations.
On the other hand, it would "build up customer-based product lines, such as derivatives, structured products or risk management services for companies."
The bank is struggling to return to profitability after several difficult years that have seen deep losses.
It said that in the third quarter it had a net loss of 208 million euros compared with a net shortfall of 2.305 billion euros in the same period in 2003
Analysts had forecast the bank would turn a profit in a range of 79-123 million euros.
The bank also reported a pretax loss of 121 million euros for the third quarter, against a loss of 2.253 billion euros a year earlier, while analysts had expected a pretax profit of 95-208 million euros.
Third quarter results were dragged down by the weak performance of Commerzbank's investment banking division, the only loss-making division, with a pretax loss of 230 million euros.
Commerzbank posted net interest income of 718 million euros, up from 662 million, and net commission income of 526 million euros, up from 509 million.
Loan loss provisions for the third quarter dropped to 199 million euros from 273 million.
The bank said it had a third quarter trading loss of nine million euros, against a profit of 107 million. Analysts had forecast a trading profit of 90-162 million euros.
Investors concentrated on the restructuring rather than the fresh losses and shares in the group rose after initially dipping following the announcement.
In late afternoon trading, Commerzbank shares were up 0.18 euros or 1.20 percent at 15.15 euros while the DAX30 index of leading German stocks gained 0.18 percent to 4,076.43 points.
"Commerzbank has distracted the attention of the market away from the quarterly results by announcing the restructuring of investment banking," analyst Andreas Weese of HVB said.
11/09/2004 - 20:19 GMT - AFP