German lender Commerzbank has today announced it will be slashing just shy of 10,000 jobs, while also halting dividend payouts to cover the cost of the latest stages of its business overhaul.
Around 9,600 full-time jobs will be shed from the bank over the course of the next four years, as it starts to close down some of its non-core business divisions and focuses on digitisation and automation of workflows to boost efficiency.
However, the shift in focus will also mean the company needs to fill around 2,300 new jobs, bringing the net number of full-time jobs lost to around 7,300.
Such a shakeup will not come cheap either, with the bank estimating restructuring costs of €1.1bn (£950m). To cover this, the lender has decided to put a stop to dividend payouts for the foreseeable and retain its full earnings.
The bank also announced, although it predicted impairment costs of €700m during its third quarter, it still expected to turn a small profit for the full year of 2016.
Commerzbank declined to comment further on the jobs at risk.
Shares dipped sharply on the news and are currently trading down 1.8 per cent at €5.90.
The bank, which is partly state owned, is currently in the process of rolling out its "Commerzbank 4.0" strategy in a bid to boost profitability by 2020.
When the bank released its half-year results in August, it warned the tricky trading environment banks faced was making it increasingly difficult for it to pull in revenues.
The news of the job cuts at Commerzbank come as fellow German bank Deutsche Bank battles rumours about its financial health.
Over the weekend, reports emerged that German Chancellor Angela Merkel would not be prepared to offer Deutsche Bank state assistance, at a time when it is facing a record $14bn (£10.8bn) fine from the US Department of Justice for mis-selling mortgage-backed securities.
The news sent the share price plummeting to its lowest level since the 1980s when the market re-opened on Monday.
However, yesterday, reports emerged in the German media that the country's government was preparing a contingency plan after all, even though this was later denied, which sent share price strongly back in the other direction.
Now, a number of the financial sector's biggest names have been queuing up to voice their concerns on the health of Europe's banking sector, including Credit Suisse boss Tidjane Thiam.
Meanwhile, former chancellor of the exchequer Lord Lamont of Lerwick warned earlier in the week that "the biggest threat to Europe is the banking crisis", pointing the finger at the German and Italian systems in particular.