Germany’s largest lender
Deutsche Bank said Thursday it will slash over 7,000 jobs and dramatically
scale back its investment banking activities as it seeks to turn the page on
years of losses.
The announcement came just hours
before the bank’s annual general meeting kicked off, where newly appointed chief
executive Christian Sewing sought to reassure unhappy investors Deutsche is
ready to do what it takes to return to profitability.
“We are not yet where we should
be. Therefore we must act, and we must act swiftly and forcefully,” Sewing told
shareholders in Frankfurt.
In a statement, Deutsche said the
number of full-time positions globally would fall from 97,000 “to well below
90,000”. “The associated personnel reductions are underway,” it added.
Deutsche did not mention which
countries would be affected but said a quarter of the jobs in its equities and
sales trading business would be cut.
The jobs cull is the first big
decision taken by Sewing, who unexpectedly replaced CEO John Cryan in early April.
Sewing had already signalled he
was planning deep cuts at Deutsche’s trouble-plagued investment banking arm,
shifting the focus to more stable business activities such as retail banking,
particularly in Europe.
“We remain committed to our
corporate and investment bank and our international presence,” Sewing said.
“We are Europe’s alternative in
the international financing and capital markets business. However, we must
concentrate on what we truly do well.”
As part of the revamp, Deutsche
added that it will reduce the investment bank’s exposures by over 100 billion
euros, or around 10 percent.
Deutsche also said it would step
up its cost-cutting drive, aiming to reduce adjusted costs to 22 billion euros
($26 billion) in 2019, compared with 23 billion this year.
“Overall, we see today’s
announcement as the right step,” JPMorgan analysts said in a client note.
Investors appeared unimpressed,
however, with Deutsche shares slipping 1.10 percent to 10.78 by 0945 GMT,
against a Dax index of leading German shares up 0.16 percent.
– Angry shareholders –
Thursday’s shareholder gathering
is likely to be a stormy one, with investors expected to vent their anger over
the bank’s disappointing stock performance, poor earnings results and last
month’s turbulent leadership reshuffle.
Former CEO Cryan was
unceremoniously ousted after coming under growing pressure from leading
shareholders and supervisory board chief Paul Achleitner, who accused the
Briton of taking too long to get the financial giant back on track after it posted
its third year of losses in 2017.
Sewing, a Deutsche veteran, has
vowed to refocus Deutsche Bank on retail banking and asset management, seen as
more stable sources of income while slimming down its share trading and other
investment banking activities.
In corporate banking, Deutsche
plans to slash its commitment to the United States and Asia, and instead focus
more on Germany and Europe.
Other items on Deutsche’s
restructuring to-do list include fully integrating subsidiary Postbank into its
German retail banking operations and further reducing its massive holdings of
financial derivatives.
– ‘More effective leadership’
–
Deutsche’s woes can in part be
traced back to its bold attempt to compete with Wall Street investment banks in
the years leading up to the financial crisis — which left the German giant
saddled with a toxic legacy of risky assets and costly legal challenges.
Although ex-boss Cryan was
credited with neutralising the worst legal threats, mostly by paying billions
in fines and compensation, he failed to drag the bank back into the black.
Deutsche even reported a
bigger-than-expected net loss of 735 million euros in 2017, which it blamed
mainly on US President Donald Trump’s corporate tax reform.
Read much more at source:
No comments:
Post a Comment