The executive board and works council at DZ Bank, Germany's largest cooperative banking group, have resolved a dispute over job cuts, paving the way for the merger with rival WGZ Bank to proceed as planned.
According to Handelsblatt's sources, the agreement will protect employees from layoffs until 2020. Early and partial retirement benefits will also improve under a five-year plan, a DZ Bank spokeswoman confirmed.
The executive board has officially signed off on the agreement, and the works council that represents employees is expected to do the same on Tuesday.
The merger of DZ and WGZ will create the largest cooperative financial institution in Germany with 1,000 participating local banks. Similar to credit unions in the United States, cooperative banks are owned by their members, who have a vote in decisions and share profits.
WGZ and DZ have had several failed merger attempts. This fifth set of talks faltered at the end of last year due to a dispute over layoffs.
Through the merger, DZ and WGZ plan to cut 700 full-time jobs. Many employees, however, work part-time and the union Verdi believes as many as 1,000 positions are actually in danger.
But now the merger is expected to proceed as planned and conclude on August 1. According to Handelsblatt's sources, the executive board and works council at WGZ Bank are expected to reach a similar agreement this week. Negotiations are set for Wednesday.
The merged banks will use the name DZ, which will become the third-largest financial institution in Germany after Deutsche Bank and Commerzbank. The current chief executive at DZ Bank, Wolfgang Kirsch, will lead the combined group.
The new central DZ Bank will not offer retail accounts to individual customers – this is only done by the local cooperative banks. Instead, it will independently serve larger corporate and investment clients around the country and even abroad.
Through the merger, DZ and WGZ plan to cut 700 full-time jobs. Many employees, however, work part-time and the service union Ver.di believes as many as 1,000 positions are actually in danger. In 2014, the two banks had 5,700 part-time and full-time employees.
By agreeing to postpone all layoffs until 2020, the executive board at DZ won a free hand to organize the new bank as it sees fit and appoint almost all the leadership positions. The works council has the right to review these decisions but doesn't have a veto.
Though WGZ is expected to reach a similar agreement, the bank's works council made clear in an internal memo that it's not bound by the decisions made at DZ.
The executive board at WGZ, however, views DZ's plan favorably. Chief executive, Hans-Bernd Wolberg, described it as "respectable, reasonable and good." When asked by Handelsblatt about WGZ's plans, a spokesman declined to comment.
According to Handelsblatt's sources, employees at both DZ and WGZ will learn more about the details sometime this week.
Yasmin Osman is a financial editor with Handelsblatt's banking team in Frankfurt. To contact the author: [email protected]