Axe falls on 18000 Deutsche Bank jobs in $8.3b reinvention

Jeannie Matthews
July 9, 2019

Hundreds of employees at the bank's Wall Street office were summoned to the building's cafeteria on Monday morning to learn their fates, sources within the bank told Reuters.

Deutsche confirmed its Australian equities division would wind down as part of plans to scrap its global equities business. It aims to break even or turn a profit in 2020 but there is "significant uncertainty in that forecast".

The German giant's share price fell to a low of 6.66 euros ($7.47) before closing down 5.4 percent at 6.79 euros, following Sunday's announcement of 18,000 job losses by 2022 as the company transitions out of high-risk investment banking.

Deutsche Bank gave no geographic breakdown for the job cuts when it announced the plan on Sunday.

Deutsch Bank paid billions in fines and settlements related to behavior before and after the global financial crisis, including a $7.2 billion settlement in 2017 with the U.S. Justice Department over selling bonds based on mortgages to people with shaky credit.

The restructuring follows its failure to agree a merger with rival Commerzbank.

However, employees at its London-headquartered global wealth management division insisted last night that their mandate was "to continue to grow headcount aggressively", despite the cost-conscious environment.

Deutsche said the restructuring would push the bank into a loss this year, meaning it will have been in the red four out of the past five years.

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In Hong Kong, a group of three upset-looking bank employees took a picture of themselves besides a large Deutsche Bank logo outside the lender's office, hugging each other before hailing a waiting taxi.

"That said, the Deutsche people could be attractive as they are effectively free agents - they will likely be getting their stock and won't have any notice period, so can start straightaway", he said.

However, the chequered history of Deutsche's investment banking division meant many could have probably seen this coming. "In refocusing the bank around our clients, we are returning to our roots and to what once made us one of the leading banks in the world", he said.

In aggregate, Deutsche Bank will reduce risk-weighted assets now allocated to these businesses by approximately 40 per cent.

It opened its first London branch in 1873 and is one of the City's largest employers. In order to settle balance sheet items amounting to 74 billion euros from these business units, the bank will create an internal "bad bank".

Analysts expect Deutsche Bank's departure to be a net benefit for the USA -based investment banks like Goldman Sachs, Morgan Stanley and JPMorgan Chase.

Deutsche Bank had slipped in recent years in Asia, hitting 17th last year and 18th in 2019, Refinitiv data showed.

He said: "News of prime minister Theresa May's resignation signalled a potential shift in Brexit negotiations in the months ahead, but with no new leader in place, these negotiations remain at an impasse".

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