Commerzbank recorded massive losses of more than €400million (£361m) yesterday and is huge reversal of last year’s €380million profit.
The 147-year-old Frankfurt-based giant has slashed 9,600 of 45,000 jobs and has earmarked a further €807million (£720m) to mitigate against job cuts following severance agreements with works councils.
German banks suffered especially harshly in the financial crisis as American securities – which the Landesbanks were major investors in – crashed in 2008.
The banks have yet to really fully recover – and some are hanging on by the skin of their teeth.
Commerzbank in particular has struggled to hold on, with revenue down 7.7 per cent to €2.07billion ($ 2.45bn)
However since October, they have gained more than half a million customers, the daughter Comdirect contributed 100,000 with the takeover of the online broker Onvista.
“In customer growth, we are above plan, also because we have invested,” said CEO Martine Zielke. “There will still be some time to go before this is reflected in profit growth.”
The news comes as Deutsche Bank said the eurozone’s largest economy has outperformed in recent years, but the trend is deceptive and could come to an abrupt halt.
Stefan Schneider, head of the macroeconomy team at Bank Thinktank Deutsche Bank Research, said: “The German economy is already growing above its potential for the fifth year in a row.”
But he also warned that the boom is deceptive – and Germany will soon be facing a rude awakening.
The failing banks could be a blow to Angela Merkel, who is hoping to be reelected in the country’s autumn elections.
She will go up against former European union boss Martin Schulz on September 24, who is still lagging behind in the polls.
Germany’s current economic strengths, such as low unemployment, are a result of the last decade of government – with Merkel having been in charge for 12 years – according to Michael Heise, chief economist at Allianz SE.
But he warned Germany risks becoming “complacent and squandering its economic success” as he suggested Mrs Merkel’s focus on immigration could eventually cost her the election as the econoy fails.
He said: “Of course, German Chancellor Angela Merkel’s government has faced a host of political challenges, from the refugee influx to the war in Ukraine to Brexit, that have absorbed much of the government’s attention.
“It is all the more important that after the September parliamentary election, Berlin puts economic reforms back on the agenda.”