Aides to German Chancellor Angela Merkel last week told lawmakers the state would not take a stake in Deutsche Bank AG if it were to issue new stock, the Wall Street Journal said on Friday, citing a person who attended the briefing.
Deutsche has been engulfed in crisis since news emerged last month of a US Department of Justice demand for US$14 billion to settle allegations that it mis-sold mortgage securities before the global financial crisis.
It is fighting the claim, but might have to turn to investors for more money depending on the size of any eventual settlement.
In a closed-door briefing with a small group of lawmakers last week, aides to the chancellor and senior German Federal Ministry of Finance officials were quoted by the newspaper as saying it was “inconceivable for the state to take a stake in Deutsche Bank.”
“We have a different bank resolution system than in 2009 and this must apply to us in Germany too,” the government officials said according to the person.
Deutsche Bank and the ministry declined to comment.
The German government has repeatedly said state help for Deutsche Bank is not on the table, but sources said that behind the scenes the government was looking into options for the country’s biggest lender.
Deutsche Bank’s finance chief told staff representatives last month that job cuts at the bank could be double what was planned, a step that could remove a further 10,000 employees, a person with direct knowledge of the matter told reporters.
Although no such decision has yet been taken, Deutsche Bank chief financial officer Marcus Schenck’s remarks at an internal meeting signaled that the lender is considering further significant cost cuts, as it faces a multibillion-euro fine and a crisis of confidence among investors.
Deutsche Bank declined to comment.
Such cuts, if agreed, would likely take many years, but setting such a goal could reassure investors that the bank is determined to tackle costs that sources said the European Central Bank sees as bloated.
If 10,000 job cuts were ultimately to follow the 9,000 announced by management in October last year, roughly one in five of the bank’s workforce around the globe would be affected.
A second person familiar with these discussions said management was also examining the countries where the bank was active to see “whether it was really worth its while [staying in those countries].”
However, given potentially high severance costs and revenue losses, it remains unclear whether a further attempt by Deutsche Bank to trim staff can be achieved.
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