Deutsche Bank says it will cut at least 7,000 jobs in restructuring move
The reductions will take the number of jobs at the Frankfurt-based Deutsche Bank to well below 90,000, and lead to a restructuring charge of as much as $935 million this year, said the lender.business Updated: May 24, 2018 14:08 IST
Deutsche Bank AG will cut a quarter of equities jobs and reduce overall positions by at least 7,000 as chief executive officer Christian Sewing seeks to slash costs and boost profitability at the investment bank.
The reductions will take the number of jobs at the Frankfurt-based lender to well below 90,000 and lead to a restructuring charge of as much as 800 million euros ($935 million) this year, it said in a statement on Thursday. The bank also plans to reduce funds at risk and seek to further drive down expenses.
Sewing is accelerating a push to refocus the lender on its European home market and reverse a two-decade effort to compete head-to-head with the large Wall Street firms that dominate volatile securities trading. The future of the investment bank and failure of predecessor John Cryan to cut costs and restructure fast enough had been key factors in last month’s management shakeup. Global equities has been one of the new CEO’s first targets.
The Deutsche Bank announcement comes after people familiar with the matter had said on Wednesday that the firm is considering 10,000 job cuts. What’s not clear is just how deep the restructuring may go, given the language that full time positions will be “well below” 90,000 from “just over” 97,000 at present.
“The equities business is a very sensible area to focus the cuts on seeing as they haven’t been achieving the return on capital they want there,” Neil Smith, an analyst at Bankhaus Lampe, said by phone from Dusseldorf. “The key issue for Sewing to focus on immediately is cost, where Deutsche Bank disappointed last year.”
Deutsche Bank fluctuated in early trading in Frankfurt, with the stock down 0.4% to 10.85 euros as of 9:08 am local time. The bank holds its annual general meeting on Thursday in the city.
The job cuts target is the first given by Sewing, who last month also said the bank will scale back in U.S. rates and trading and corporate finance in the US and Asia. Cryan in late 2015 foresaw 9,000 job cuts by 2020, though group headcount actually fell by about 1,500 during his tenure. Deutsche Bank will reduce its leverage exposure in the corporate and investment bank by more than 100 billion euros and target about a 10% post-tax return on tangible equity from 2021 onwards as part of the targets announced on Thursday.
There has been increasing evidence in recent weeks that the pace of job cuts is picking up, with the investment bank bearing the brunt. Deutsche Bank has said it will move to smaller premises in New York and will close its Houston office entirely due to a withdrawal from advisory services for the oil and gas sector.
“To stop market share loss, we believe any announced IB cuts and changes to the IB should be final,” Goldman Sachs Group analysts had argued before today’s announcement. “The “finality” of the process needs to be considered credible by all key stakeholders - clients, employees, and investors.”
Chief Financial Officer James von Moltke hinted last month that the new CEO’s cost-cutting measures to a large extent are a continuation of plans already being developed under Cryan. The bank foresees adjusted costs not exceeding 23 billion euros this year, with that figure falling to 22 billion euros in 2019, with no further significant disposals planned, it said.