Germany's fourth biggest bank, Commerzbank, is to cut 3,400 jobs by 2003 as part of a cost-cutting drive.

The company is refusing to comment on where the axe will fall but it is thought the majority of jobs will be lost from Commerzbank's German operations.

Some jobs are also expected to go at Commerzbank's securities operation, which employs about 1,300 people at offices in London.

The bank claims it is the first time since 1870, when it was founded, that it has been forced to make redundancies.

Warning

It says it will make the majority of the lay-offs through voluntary redundancies.

The German banking sector has been hit by a wave of job cuts in recent weeks.

The country's largest bank, Deutsche Bank, said it will shed 2,600 posts by 2003; Dresdner Bank has said it will cut 7,800; and the third biggest, Bayerische HypoVereinsbank said it would cut a further 2,000 jobs, bringing the total to 7,500.

Commerzbank had warned last month that jobs might have to go, and confirmed the number of posts being shed following a board meeting.

In June, Commerzbank launched a plan to cut costs by trimming IT spending and reducing the number of branches it operates to 150 from 780.

Germany's banks have come under pressure to take action as they try to come to terms with worsening economic conditions.

Take-over target

Commerzbank, which has been singled-out as a potential take-over target, is under pressure to cut costs amid a falling share price brought on by investor fears of further bad news on profits.

Net profit in the first six months of 2001 was down by more than 75% to 262m euros ($164m).

Last month Commerzbank shares touched their lowest level for eight years.

Analysts said the paying for the planned redundancies would also hit profits.

There had been little impact from a restructuring programme carried out last year, analysts added.

Commerzbank is expected to make an official announcement on the job cuts on Tuesday afternoon.