Yahoo Finance Deutsche Bank slashes 7,000 jobs, with City likely to take hit
Deutsche Bank, Germany’s largest lender, is to cut more than 7,000 jobs globally, with its investment banking business in London likely to be hit.
Deutsche said one in four equities sales and trading jobs, which are mainly located in New York and London, would be axed. The bank’s global headcount is expected to fall from just over 97,000 to well below 90,000. The firm said it would not provide a breakdown at this stage but that all regions would be affected.
Deutsche’s largest investment banking operation is based in the City of London. It employs about 8,500 people in the UK – mostly in London, with smaller operations in Birmingham and Bournemouth – and is one of the largest employers in the City.
Deutsche’s new chief executive, Christian Sewing, said: “We remain committed to our corporate and investment bank and our international presence – we are unwavering in that. We are Europe’s alternative in the international financing and capital markets business. However, we must concentrate on what we truly do well.”
The move is part of a plan to scale back its global investment bank and refocus on Europe after three consecutive years of losses. Last month the bank said it would pare back US bond trading, global stock trading and its business serving hedge funds.
The news came a few hours before the group’s annual shareholder meeting in Frankfurt, where Paul Achleitner, who has chaired Deutsche since 2012, faced a no-confidence motion over the company’s poor performance.
When Sewing, the former co-head of the bank’s retail banking arm, was appointed to replace his British predecessor, John Cryan, in April, he vowed to take “tough decisions” to return the bank to profitability. Cryan was criticised for being too slow in pushing through cost-cutting measures.
Sewing told shareholders gathered at Frankfurt’s Festhalle that the job cuts were already under way and that 600 investment bankers had left in the last seven weeks. He said the bank wanted a better balance between business divisions.
He also warned of a tough outlook: “In the second quarter, the revenue situation remains challenging, particularly for the corporate and investment bank.”
At the meeting, where shareholders were served Frankfurter sausages, pretzels and cake, Achleitner denied claims he had botched the change of CEO last month. Cryan’s ousting came after a two-week boardroom battle and the Deutsche chairman insisted that Sewing was the best man for the job, rather than a company outsider.
Shareholders called on Deutsche to speed up the recovery after months of internal turmoil.
Hans-Christoph Hirt of Hermes Investment Management, a Deutsche Bank shareholder, told Achleitner – who has presided over four CEO changes – he should be replaced and called for more “effective” leadership of the supervisory board. “Unfortunately, the results of your work are not convincing.”
Klaus Nieding of the shareholder lobby group DSW said: “It is high-time to … end the years-long and still-popular ‘Deutsche Bank bashing’ and get to work finally getting our bank back on its feet after six long years of restructuring.”
However, Brian Scott-Quinn, the director of banking programmes at Henley Business School, said Deutsche was trapped in a “spiral of decline” that started 20 years ago.
“We really no longer need Deutsche Bank. There are already plenty of retail banks in Germany to provide competition and a good service to consumers. In investment banking it is the same as there are still good European investment banks which can provide a good service to German industry. It is almost impossible now to recover from years of mismanagement.”
The cutbacks will mean Deutsche stepping back from several decades of global expansion in which the bank vied with Wall Street rivals such as Goldman Sachs and JPMorgan Chase.
Redundancy packages and other restructuring costs will result in charges of up to €800m this year, hitting profits.
Deutsche’s shares fell almost 6% on Thursday.
