Deutsche Bank AG will cut equities jobs by a quarter 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 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 chief executive's first targets.
"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 who has a buy recommendation on Deutsche Bank shares, said by phone from Dusseldorf. "The key issue for Sewing to focus on immediately is cost, where Deutsche Bank disappointed last year.
The bank is considering 10,000 job cuts, people with knowledge of the matter said on Wednesday.
Precise Forecast
The new target for job cuts is the first precise forecast given by Mr Sewing. Mr Cryan in late 2015 foresaw 9,000 job cuts by 2020. Group headcount actually fell by about 1,500 during Cryan’s tenure. The bank also on Thursday said it will reduce its leverage exposure in the corporate and investment bank by more than 100 billion euros as part of the overhaul and is targeting about a 10 per cent post-tax return on tangible equity from 2021 onwards.
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.
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 Mr Cryan. The bank foresees adjusted costs not exceeding 23 billion euros this year, with that figure falling to €22 billion in 2019. – Bloomberg
