Staff at the German bank await details of the group's fifth strategy rethink since 2012
Deutsche Bank could begin a fresh round of job cuts across its business at the start of next week, as part of a radical new restructuring affecting as many as 20,000 staff at the stricken German lender.
Deutsche is expected to announce an overhaul of its operations over the weekend that will include the downsizing or abandonment of certain investment banking business lines in Europe and the US.
Executives have reassured employees in certain London divisions – notably foreign exchange – that they will be largely spared from any deep cuts, but staff at its Winchester Street offices have been told to expect an announcement on Monday, people familiar with the matter told Financial News.
On July 5, Garth Ritchie, head of Deutsche's investment bank, quit.
The new restructure will represent the bank’s fifth strategy rethink since 2012 and comes little more than a year after chief executive Christian Sewing’s last attempt to reshape Deutsche into a leaner and more profitable business.
Deutsche’s shares have fallen 72% over the last five years and, at €7.02, remain close to record lows as the group’s bloated investment bank with its high cost base continues to weigh on performance.
In the last week, The Wall Street Journal has reported that Deutsche is considering between 15,000 and 20,000 new job cuts as well as the sale or transfer of large parts of its US operations, including its once-prized business serving hedge funds.
Deutsche’s corporate and investment bank generates a return on equity – a key measure of profitability – of less than 1% and has a cost-income ratio above 90%. At around 17,000, the division employs more front-line staff than JPMorgan. Deutsche’s CIB posted first-quarter revenues of €3.3bn in the division, a 13% year-on-year decline.
Under a plan laid out by Sewing shortly after he became chief executive in April 2018, Deutsche made sweeping cuts to the division, refocusing on strengths in foreign exchange trading, debt underwriting and transaction banking.
But one senior trader at Deutsche said that even after a succession of cuts over the past year, staff were at “panic stations”. Another former Deutsche trader said that colleagues had been in touch “every day” asking to be pointed towards potential job opportunities.
The head of equities at a rival European investment bank in London said they had been “deluged with CVs” from sales and trading staff at Deutsche in the US, Asia and Europe who felt “certain they would lose their jobs”.
Investors, analysts and rivals have remained largely unconvinced by Sewing’s 2018 plan and, following the collapse of talks over a potential merger with domestic rival Commerzbank in April, urged the bank’s management to take quick and decisive action.
A senior investment banker at one of Deutsche’s US competitors told Financial News in April: “They will have to get rid of certain people, get rid of businesses. It will be very painful, but I don’t see what else they do at this point.”
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