Deutsche’s new CEO sweeps clean

Asmany as 10 000 jobs said to be on the line as bank cuts costs

● Deutsche Bank is cutting more than 7 000 jobs to reduce costs and restore profitability while maintaining its international reach as its new CEO seeks to reassure investors and clients.

Germany’s biggest bank said global headcount would fall to well below 90 000 from 97 000, with a 25% cut in equities sales and trading jobs, which are mainly in New York and London and where it has been losing ground to US rivals.

Deutsche Bank did not give a specific number, but a person with knowledge of the matter had said ahead of the lender’s AGM, held on Thursday, that it was aiming to axe 10 000 positions.

Christian Sewing, who became CEO in an abrupt management reshuffle last month, said the bank was committed to its international presence, fleshing out his plan to scale back its global investment bank and refocus on Europe and its home market after three consecutive years of losses.

Last month, the bank flagged cuts to US bond trading, equities and its business serving hedge funds.

“We remain committed to our Corporate & Investment Bank and our international presence — we are unwavering in that,” Sewing said, while acknowledging a “challenging” revenue environment.

Deutsche Bank has already dismissed 600 investment bankers over the past seven weeks and will cut spending by €1- billion (R14.6-billion) by the end of 2019 in its investment bank.

“This reduction is already fully under way, and so far, due to the considered way we’ve handled this, we have not seen any meaningful revenue attrition,” Sewing said.

Deutsche Bank has long been a default source of lending and advice for German companies seeking to expand abroad or raise money through the bond or equity markets, a role which has had the tacit backing of successive governments in Berlin.

Sewing said Deutsche Bank’s position as a competitor to the Wall Street banking heavyweights such as Goldman Sachs, JP Morgan, Morgan Stanley and Bank of America, whose clout has grown in recent years, remained an important focus.

“We are Europe’s alternative in the international financing and capital markets business. However, we must concentrate on what we truly do well,” he said.

Deutsche Bank has been losing ground to rivals in investment banking in all regions. Its ranking for investment banking fees fell to 10th from eighth in the Americas between 2010 and 2017, to 15th from sixth in Asia-Pacific and to third from second in Europe.

Coalition data shows that in global equities, Deutsche has also lost market share in the cash, derivatives and prime services businesses over the same period. Overall in global equities it ranked between seventh and ninth in 2017 against a ranking of between fourth and seventh in 2010.

The reductions will reduce the investment bank’s leverage exposure by €100- billion, or 10%, but KBW analysts said the moves were disappointing and its shares, down more than 31% this year, were slightly weaker.

“We view this as confirmation of our view that drastic but necessary restructuring is impossible at this stage,” KBW wrote.

“We remain concerned with their ability to generate free cash flow to support business growth post-restructuring,” it said, adding that to achieve its target for a return on tangible equity of 10%, Deutsche would need €6- billion of profit, something the broker viewed as highly unlikely.

Shareholders had said they would call on Deutsche Bank to speed up the recovery process at the AGM, which comes after months of internal turmoil.

Last month, chairman Paul Achleitner abruptly replaced CEO John Cryan with Sewing amid investor complaints that the bank was falling behind in executing a turnaround. The bank is also under pressure from credit ratings agencies.

So far we have not seen any meaningful revenue attrition

Christian Sewing Deutsche Bank CEO