Dresdner Bank AG, Germany's third-biggest lender, is firing about 570 employees in its securities unit in London and New York amid a slump in equity sales and merger fees, people familiar with the situation said.
Almost 300 positions are being eliminated in the US and another 270 in London, the people said. The reductions affect employees at all levels and follow a second-quarter loss of 1 billion euros (US$980 million) at Dresdner Bank.
Dresdner, which was bought last year by Allianz AG, ``will have to cut more jobs, given the way the markets are and how hard it is to earn money,'' said Adrian Nyffeler, an analyst at Ibex Asset Management in Zurich.
The Frankfurt-based bank last month said it may shed about 3,000 jobs as it seeks to reduce costs by 2 billion euros last year.
That includes axing 1,000 positions, or 13 percent of the workforce, at the Dresdner Kleinwort Wasserstein securities unit.
Dresdner spokeswoman Claudia Bresgen declined to comment on the headcount reductions at Dresdner Kleinwort. Germany's Capital magazine earlier reported the plan to slash 1,000 jobs.
Global mergers have slumped by a third this year and equity sales have dropped by a tenth, Bloomberg data show, cutting into the earnings of investment banks. The shares of Allianz, which bought Dresdner for US$20 billion, have declined by two-thirds since Europe's biggest insurer bought the bank in July 2001.
Dresdner Bank's corporate and markets unit, which includes Dresdner Kleinwort, spent 102 euros for every 100 euros of revenue in the first half. Dresdner Kleinwort employs about 3,000 people in London and about 1,500 in the US.
Analysts expect Wall Street firms to shed more jobs with stock markets trading near five-year lows. About 54,000 jobs, or 7 percent of the industry's workforce, have been eliminated since March 2001, when the business employed 776,000 people in the US alone, US government figures show.
"Dresdner isn't alone in using these difficult times to clean up their house and get rid of people in areas where the outlook isn't too good," said John Jessen, a partner of Smith & Jessen, a Frankfurt-based headhunter for the capital markets.
Deutsche Bank AG, Germany's biggest lender, is slashing more than 14,400 jobs and HVB Group, the country's No. 2 bank, is cutting about 9,000 positions.
Merrill Lynch & Co. today cut as many as 35 equity trading jobs in London, according to people familiar with the situation.
Dresdner Bank had a return on equity of 1 percent at the end of last year, compared with 17.4 percent at BNP Paribas SA, France's biggest lender. European banks on average had a return on equity of 11.3 percent in 2001, Bloomberg data show.
Dresdner has slid to 15th this year among global merger advisers, from ninth last year, according to data compiled by Bloomberg. In stock sales, the firm has slumped to 76th from 16th, the data show.
The firm has fared better in bond sales, rising to 10th among issuers of euro-denominated debt, from 12th.
The corporates and markets division reported a first-half pretax loss of 834 million euros, compared with a profit of 571 million in the year-earlier period.
"We will again carry out significant cuts, even if the major part already is behind us," Leonhard Fischer, who runs the investment bank, told German magazine Capital this week. "We are already done with 70 percent of the work."
He expects the investment bank to be profitable next year, he told Capital.
Fischer spent US$1.6 billion on the purchase two years ago of Bruce Wasserstein's investment bank to expand in the mergers advisory business. Wasserstein quit, after Allianz bought Dresdner, and joined Lazard LLC, the world's largest privately held investment bank. Dresdner Kleinwort Wasserstein lost of at least a dozen top bankers, following Wasserstein's defection.
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