Nearly 10,000 bank employees are about to lose their jobs.

October 2, 2016 10:52

Stopping dividend payments and more than 9,000 employees possibly being laid off in the near future is bad news that the bank has had to restructure before falling into crisis.

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Germany's second largest bank has just announced plans to restructure its system.

Commerzbank, Germany's second largest bank, has just announced a restructuring plan. One of the things that worries many people working in this bank is the reduction of more than 9,000 employees to revive Commerzbank.

The bank said it would cut all staff at its branches worldwide. The estimated restructuring costs of up to $1.2 billion will leave Commerzbank with a very small net profit for 2016. That is also the reason they decided to stop paying dividends.

Meanwhile, the country's largest bank, Deutsche Bank, is at the center of concern in the global financial market because of the risk of a huge fine in the US.

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Illustration photo

The US Justice Department has ordered Deutsche Bank to pay a $14 billion fine for allegations related to the sale of mortgage-backed securities. There have even been predictions that Deutsche Bank could become the next Lehman Brothers.

Deutsche Bank shares fell 8.8%, the biggest one-day drop since June 27 in Frankfurt. About 10 investment funds simultaneously divested from Deutsche Bank.

There have been rumors in recent days that Deutsche Bank needs more capital and may need a government bailout. There have also been rumors that Deutsche Bank and Commerzbank may have to merge.

Bank's bad luck

The Bloomberg Europe Banks and Financial Services Index, a gauge of 38 European financial-banking stocks, has fallen 24% since the start of the year. The KBW Index, which tracks the prices of 24 U.S. banks, has fallen 4.6%. Wells Fargo has fallen 18%.

The market is concerned that Deutsche Bank could become a second Lehman Brothers, the bank that collapsed during the global financial crisis.

A series of banks have been in trouble recently. San Francisco-based Wells Fargo had to pay a fine of more than $185 million after US authorities accused the bank of secretly opening accounts without customers' knowledge.

Wells Fargo CEO John Stumpf had a tense four-hour hearing before the US Congress. Before the hearing had even ended, news broke that Wells Fargo would be fined for illegally seizing vehicles owned by US soldiers. Wells Fargo agreed to pay a fine of $24 million.

Germany will not bail out troubled banks, but a government rescue plan may be the only way to save troubled German banks, especially Deutsche Bank, according to a senior lawmaker in Chancellor Angela Merkel's ruling coalition.

Meanwhile, European Central Bank (ECB) President Mario Draghi said that the ECB's ultra-loose monetary policy was not the cause of the current troubles at Deutsche Bank, Germany's largest bank.

According to Vietnamnet

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Nearly 10,000 bank employees are about to lose their jobs.
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