Commerzbank has struck an agreement with employee representatives on a retrenchment exercise that will affect thousands of employees.

The agreement will make it easier for the German lender to proceed with its plan to slash 10,000 jobs, which will impact its businesses worldwide.

The agreement will implement the plan of job cuts through measures such as early retirement, with the bank now having extended the offer of early retirement to seven years.

Besides, Commerzbank also agreed to offer support for staff with perspectives inside and outside the bank.

Commerzbank member of the board of managing directors responsible for Human Resources Sabine Schmittroth said: “We have found solutions for our employees that are fair, comprehensible and socially responsible.

“The settlement of interests and social plan form the framework for being able to bring the negotiations to a conclusion by the end of the year.”

The downsizing aims to improve the profit margins of the bank, which reported its first annual loss in 2020 since the 2009 financial meltdown.

In February this year, Commerzbank finalised plans to lay off 10,000 people and shutter hundreds of branches as part of its cost reduction and digitisation strategy.

The announcement came shortly after Knof took over the reins of the bank.

Earlier this year, it was reported that Commerzbank will withdraw from Hong Kong, Luxembourg, and Hungary as part of its restructuring plan.

The report also said that the bank will transfer Asia operations to the Singapore office, while branch in Dubai will continue to serve as a representative office.

Additionally, the bank will close branches in Barcelona, ​​Bratislava, and Brussels, along with representative offices in Azerbaijan, Georgia, Indonesia, Iraq, Kazakhstan, Lebanon, Malaysia, Serbia, and Venezuela by 2024.

The restructuring costs were initially estimated at €1.8bn. However, the bank now expects the costs to be slightly more than €2bn.

The bank also plans to review the status of the agreed culling exercise in 2023. It will conduct discussions on further measures such as compulsory job cuts with the employee representatives in the first quarter of 2023 if the existing measures prove inadequate.

Commerzbank CEO Manfred Knof said: “This money is well invested as it enhances our planning certainty for the implementation of the headcount reduction.

“We engaged in some very intensive negotiations and have achieved a result that will enable the fast implementation of the transformation.”