Deutsche to cut thousands of jobs
Focus set to shift from investment banking to more stable activities
Germany’s largest lender, Deutsche Bank, will slash more than 7,000 jobs and dramatically scale back its investment banking activities, it said on Thursday, as it seeks to turn the page on years of losses.
Germany’s largest lender, Deutsche Bank, would slash more than 7,000 jobs and dramatically scale back its investment banking activities, it said on Thursday, as it seeks to turn the page on years of losses.
The announcement came just hours before the bank’s annual general meeting kicked off, where newly appointed CE Christian Sewing sought to reassure unhappy investors Deutsche is ready to do what it takes to return to profitability.
“We are not yet where we should be. Therefore we must act, and we must act swiftly and forcefully,” Sewing told shareholders in Frankfurt.
Deutsche said the number of full-time positions globally would fall from 97,000 “to well below 90,000”. “The associated personnel reductions are under way,” it added.
Deutsche did not mention which countries would be affected but said a quarter of the jobs in its equities and sales trading business would be cut.
The jobs cull is the first big decision taken by Sewing, who unexpectedly replaced CEO John Cryan in early April.
Sewing had already signalled he was planning deep cuts at Deutsche’s trouble-plagued investment banking arm, shifting the focus to more stable business activities such as retail banking, particularly in Europe.
“We remain committed to our corporate and investment bank and our international presence,” Sewing said.
“We are Europe’s alternative in the international financing and capital markets business. However, we must concentrate on what we truly do well.”
As part of the revamp, Deutsche said it would reduce the investment bank’s exposure by more than €100bn, or about 10%. Deutsche also said it would step up its cost-cutting drive, aiming to reduce adjusted costs to €22bn in 2019, compared with €23bn in 2018.
“Overall, we see today’s announcement as the right step,” JPMorgan analysts said.
Investors appeared unimpressed, with Deutsche shares slipping 1.1% to €10.78 in midmorning trade, against a 0.16% rise in the DAX index of leading German shares.
In a turbulent leadership reshuffle in April, Cryan was unceremoniously ousted after coming under pressure from leading shareholders, who accused him of taking too long to get the bank back on track.
In corporate banking, Deutsche plans to slash its commitment to the US and Asia. Other items on Deutsche’s to-do list include fully integrating subsidiary Postbank into its German retail banking operations and further reducing its massive holdings of financial derivatives.
Deutsche’s woes can in part be traced back to its bold attempt to compete with Wall Street investment banks in the years leading up to the financial crisis, which left the German bank saddled with a toxic legacy of risky assets and costly legal challenges.