Germany's second largest bank set out its agenda for the coming years – with a significantly reduced workforce and digitisation among its priorities.

Commerzbank plans to cut 9,600 jobs and suspend dividend payments as part of a strategic overhaul that seeks to boost profitability.

The Frankfurt-listed bank expects to incur restructuring costs of €1.1 billion ($1.2 billion). To cover this, it will halt dividend payments “for the time being” and retain its full earnings, it said in a statement outlining its strategic and financial objectives until 2020.

As part of the “Commerzbank 4.0” strategy, the business will be split into “private and small business customers” and “corporate clients”. Its Mittelstandsbank and corporates and markets segments will be merged and trading activities in investment banking scaled back to reduce earnings volatility and regulatory risk, while also freeing up capital to invest in its main two business segments. 

Commerzbank also plans to achieve significant efficiency gains by digitising 80 per cent of relevant processes. It is targeting between €9.8 and €10.3 billion in revenues for 2020.

As it shrinks its “non-core” businesses, digitises and automates workflows, the bank expects to cut around 9,600 full-time positions, though it said 2,300 new jobs will be created in areas of business growth.

In the first half of 2016, Commerzbank logged an operating profit of €615 million, down from €1.089 billion a year ago. Operating profit at its private customers segment was up 13 per cent year-on-year at €371 million.