Commerzbank calls in consultants from McKinsey and Bain

19 May 2020 2 min. read

Ailing German bank Commerzbank has brought in consultants from McKinsey & Company to advise on an overhaul of its strategy, shortly after arch-rival Bain & Company was also tapped to help the bank identify far-reaching cost-cutting opportunities.

Germany’s third largest bank by assets has been struggling financially for years, illustrated best by the free-fall of its share price. Back in 2007, its shares traded at €250 per share, and at the time of writing the price hovers around the €3 mark.

In a bid to revive its fortunes, Commerzbank has over the years embarked on several strategic reorientation programs, and tried sealing a merger with giant Deutsche Bank. But in April last year, the merger talks collapsed, with officials of Germany’s large banks stating that the risks and costs were too great.Commerzbank calls in McKinsey and BainIn January, the chief financial officer of Commerzbank, former McKinsey partner Bettina Orlopp, announced that the bank had hired Bain & Company to identify an additional €500 million in savings, on top of an already existing plan to slash €1 billion from its cost base by 2023.

“It is more important than ever to realise additional savings,” she said to German newspaper Handelsblatt. In their final report delivered at the end of April, Bain’s consultants have according to media reports in the country identified €350 million of potential savings, with the majority coming from savings in real estate and optimisation of back office functions.

Now, Commerzbank’s embattled chief executive officer Martin Zielke has brought in the largest of the MBB trio McKinsey & Company, as the bank seeks to accelerate its costs savings. McKinsey has been called in to oversee the development of a new corporate strategy, as well as a review of the firm’s organisational structure. The project kicked off last month and is expected to run for three to four months.

In the summer of 2019, the German government, one of the main shareholders of Commerzbank, asked Boston Consulting Group to audit the bank’s strategy and draft recommendations for a sustainable future. The consultants among others urged the bank to double or even triple its cost-cutting targets, make deep reductions to its branch network and step up its digital transformation agenda.