In order to reduce expenses by €1.4bn, Commerzbank which will do away with 10,000 jobs and lead to the closure of 450 of the bank’s 790 branches in Germany. The company employs 169 people in Luxembourg, 159 at Commerzbank AG (NLU) and 10 at Commerzbank Finance & Covered Bonds (CFCB), both of which will be closed.

Financial benefits and early retirement

The NLU unit is scheduled to close by the end of 2024 at the latest. The closure of the CFCB branch has not been assigned a date yet. However, it was involved in the negotiations between Commerzbank and employee groups led by financial sector union Aleba. The social plan will therefore also apply to the CFCB’s 10 employees.

“The main demands were achieved”, said ALEBA. This means additional financial compensation to the legal requirements and early retirement measures for some employees. Trade unions and management signed the social plan on Tuesday 5 April.

Commerzbank was established in Luxembourg in 1969. It was the second German bank to choose the grand duchy for its international expansion, according to Aleba.

Trade unions were, however, left wondering why the Luxembourg offices were being closed. “Nobody really knows. From a financial point of view, the decision does not seem logical”, said Carla Valente--a legal advisor for Aleba.

“The bank is adapting its international network to the needs of German corporate clients,” Commerzbank said. “Despite our exit from the Luxembourg financial centre, we will remain a strong partner to support our Luxembourg clients in their business activities. In future, they will be supported from our new Benelux hub in Amsterdam.”

No major concerns for other German banks

The German group has another entity in Luxembourg, specialising in real estate. This will not be affected by the closures, said Valente. That has been confirmed by Commerz Real Fund Management.

The redundancy plan at German bank Unicredit in Luxembourg, announced in 2017, is still underway. The closure should be effective “within a year and a half”.

Apart from these German lenders, “I am not aware of any other banks that will disappear, apart from a few small establishments affected by the war in Ukraine that employ barely a handful of people”, says Valente. "I spoke to another German bank this morning (whose identity is confidential) and it is far from leaving Luxembourg.”

This story was first published in French on . It has been translated and edited for Delano.