Deutsche Bank AG yesterday said it would cut more than 7,000 jobs and dramatically scale back its investment banking activities as it tries to turn the corner on years of losses.
“The number of full-time equivalent positions is expected to fall from just over 97,000 currently to well below 90,000. The associated personnel reductions are underway,” a statement said.
A quarter of the jobs in its equities and sales trading business would be hit by the cuts, the bank said.
The cull is the first big decision to be announced under new chief executive Christian Sewing, who unexpectedly replaced John Cryan early last month.
As part of the revamp, Deutsche said it plans to reduce its leverage exposure by more than 100 billion euros (US$117.25 billion), or about 10 percent, with the majority of the reduction set to be achieved “by the end of this year.”
“We remain committed to our corporate and investment bank and our international presence — we are unwavering in that,” Sewing said in the statement. “We are Europe’s alternative in the international financing and capital markets business. However, we must concentrate on what we truly do well.”
The announcements came just hours before the start of Deutsche’s annual general meeting in Frankfurt, where management was expect expected to face a grilling from shareholders after the bank posted its third straight year of losses last year.
Upon taking the reins last month, Sewing said the bank urgently needs to slash costs and shift away from its less profitable businesses.
He has vowed to refocus the 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 US and Asia, instead focusing more on Germany and Europe.
Other items on Deutsche’s restructuring to-do list include fully integrating subsidiary Postbank AG into its German retail banking operations and further reducing its massive holdings of financial derivatives.
Deutsche yesterday also said it would step up its cost-cutting drive, aiming to reduce adjusted costs to 22 billion euros next year, from 23 billion this year.
Deutsche reported a bigger-than-expected net loss of 735 million euros last year, which it blamed mainly on US President Donald Trump’s corporate tax reform.
By early this year, unimpressed investors had driven the bank’s share price to below half its 2015 level, prompting supervisory board chairman Paul Achleitner to look for a new top manager.
Yet Achleitner has since come in the firing line himself for overseeing years of failed strategies at the bank and his own future could hang in the balance at yesterday’s meeting.
Shareholder advisor Hermes EOS in a statement earlier this week said that the bank should “start to consider plans for the succession of Paul Achleitner,” calling for “more effective leadership and management stability” at Deutsche.
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