Germany’s second-largest lender Commerzbank (CRZBY) has announced the abrupt departure of CEO Martin Zielke and Chairman of the Supervisory board Stefan Schmittmann.
Zielke also offered to terminate his role as Board Member and Chairman of the Board of Managing Directors before the end of the year, with the Supervisory Board to decide the date at its 8 July meeting. No successor has been named yet to replace Stefan Schmittmann, whose resignation will be effective 3 August 2020.
In a statement, Zielke described the financial performance of the bank as ‘unsatisfactory’ and said he wants to take ‘responsibility’ for this. He wants ‘to open the way for a fresh start’. ‘The bank needs a profound transformation and a new CEO who gets the necessary time from the market to implement the strategy’, according to Zielke.
Indeed, activist investor Cerberus Capital Management has been vocal in its criticism of the bank’s underperformance. According to Reuters, Cerberus- which owns a stake in the company of over 5%- recently pushed for Commerzbank to cut 7,000 jobs to cut costs.
“The announcement comes as a surprise to us with press articles even earlier today (Bloomberg) suggesting that the supervisory board will decide on a new strategic plan this week” commented RBC Capital analyst Anke Reingen. The analyst has a hold rating on the stock with a speculative risk status and 4 euro price target.
For Commerzbank’s shares she sees this as a short-term negative given the instability in management and the suggestion how challenging it is to improve the profitability of the bank.
However, medium to long term, Reingen believes that the changes in management might be positive for the shares as the bank changes its strategy more dramatically and/ or it might be part of EU bank consolidation.
Meanwhile Kepler Capital’s Carola Holtz recently reiterated a bearish sell rating on the stock. Shares are trading down 25% year-to-date. (See Commerzbank stock analysis on TipRanks).
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