Dive Brief:

• Germany's second-largest lender, Commerzbank, named Manfred Knof as its new CEO late Saturday. Knof spent the past year as head of German retail banking at rival Deutsche Bank and previously was CEO of the German unit of insurer Allianz.
• Knof takes over from CEO Martin Zielke on Jan. 1. Zielke and former Commerzbank board Chairman Stefan Schmittmann submitted their resignations in July after investor Cerberus said it was unimpressed with the bank's plan to return to profitability. The board elected a new chair, Hans-Jörg Vetter, in August. Vetter convened the board with less than 24 hours' notice Saturday to inform it of his choice, Reuters reported.
• At both Allianz and Deutsche, Knof developed a reputation as a shrewd cost cutter. "The crowbar is his most favourite tool [in dealing with a conflict]," a former Allianz colleague told the Financial Times in 2019, after Knof went to Deutsche.

Dive Insight:

In picking Knof, Commerzbank passed over two internal candidates, CFO Bettina Orlopp and corporate clients chief Roland Boekhout. Boekhout had been considered the leading candidate before Vetter became chairman. Vetter wanted an external candidate, sources told Bloomberg.

Knof's cost-cutting experience will most certainly be handy in his new role. In his single year at Deutsche, Knof oversaw the May merger of two retail divisions. However, according to Bloomberg, he told people around him he was dissatisfied with his role.

Commerzbank, whose shares have lost about half their value since a proposed tie-up with Deutsche fell through in April 2019, is looking to close up to 800 branches and cut as many as 10,000 jobs, Bloomberg reported.

Vetter told employees Commerzbank is not a "restructuring case," but it must become more efficient. "It needs to increase its revenues, reduce costs, and to question the status quo," Vetter said, according to a transcript seen by Reuters.

Commerzbank has indicated it aims to digitize its operations further — a task Knof undertook at Allianz, according to a press release.

A merger with Deutsche may still be one route to profitability for Commerzbank, Bloomberg analyst Philip Richards said, noting that it may be on track to report losses this year and in 2021. Combining with Deutsche would help it streamline its retail operations and trim any branch overlap. Deutsche CEO Christian Sewing, however, has said mergers are not a focus for now, Reuters reported, citing anonymous sources.

Cerberus this summer insisted on "significant change" to the bank's management and board to stop a "downward spiral" caused by soaring costs, plunging profits and "progressively less ambitious" plans, the Financial Times and The Wall Street Journal reported.

Knof appears to have Cerberus's support, sources told Bloomberg. He has the "necessary expertise and human leadership skills for the tasks that lie ahead," Vetter said in the bank's press release.

Despite what appears to be a clear path forward for Commerzbank — a push further into digital to go along with cost cutting and standardization of processes — a portfolio manager at Deka said the task may be deceptively difficult. "It sounds simple, but the last management team failed," Andreas Thomae told Reuters.