(ShareCast News) - Troubled German lender Commerzbank will reduce its workforce by 20% in the next few years by cutting 9,600 jobs, in an attempt to cut costs and boost profitability.
In addition, the revamp prompted by CEO Martin Zielke is likely to be funded by the withdrawal of the company's annual dividend.
The bank has been hard hit by the European Central Bank's interest rates in recent years, and has attempted to stoke profits by passing costs to corporate customers, but margins remain slim.
The bank, which is partially owned by the German state, released a statement on Thursday to confirm the job losses.
"The focus on the core business, with some business activities being discontinued, and the digitisation and automation of workflows will lead to staff reductions amounting to around 9,600 full-time positions," the statement read.
The cuts represent new boss Zielke's attempts to shrink the company and streamline several of its operations together.
Speculation about job losses grew in recent weeks as Zielke carried out a strategy review of all the company's banking operations.
Shares in Commerzbank have plunged 37% this year on the back of the company's financial struggles.
Deutsche Bank has also come under pressure following a US Department of Justice proposal that the German lender make a $14bn (€12.5bn) payment to settle an investigation into its sale of residential mortgage-backed securities.
Speculation suggests Germany's biggest lender may have to receive state aid, something that the government has denied.