Fitch Ratings claims that the offers of resignation of Commerzbank’s CEO Martin Zielke and board chairman Stefan Schmittmann will change the strategic direction of the company in a significant way. But the agency adds that the news illustrates widespread disagreement among the company’s shareholders about the direction the bank should be going in. Commerzbank is due to discuss the chief executive’s move at a meeting it holds on July 8. “We believe that Commerzbank (BBB/Negative) will substantially revise its strategy under a new chief executive, potentially with less emphasis on growth, a reduction in low-profitability client relationships and more focus on cost savings,” writes Fitch Agency. “We expect this to lead to further staff cuts and branch closures beyond the 200 already announced. Such measures could help to restore the bank’s chronically weak earnings in the medium term but would be not be a quick fix as additional restructuring costs would compound the pressure on profitability in the near term.” But the agency concludes that if the new strategic plan were to be carried out effectively, it would lead to significantly improvements in profitability. The board appears to favor a rapid replacement of Commerzbank’s top officers, but the activist investor Cerebrus has called for an orderly, thoughtful process.
