Group restructuring of Deutsche Bank
Author: Thomas Wandler
Official plans announced
Deutsche Bank has initiated a radical restructuring of the group. Among other things, thousands of jobs will be cut. After a meeting of several hours, the supervisory board approved the “hard cuts” planned by CEO Christian Sewing.
It is now official that around 18,000 full-time positions worldwide will be cut over the next few years. The aim is to do this as “socially acceptable” as possible by phasing out fixed-term employment contracts, terminating employees themselves or offering them termination agreements.
By 2022, the number of full-time jobs should be reduced from 91,500 to 74,000. It is still unclear where exactly the job cuts will be highest. “Since the bank wants to cut investment banking, the job cuts will probably affect locations such as London and New York in particular” estimates banking expert Hans-Peter Burghof. In addition, branch closures are expected “because digitalization makes many jobs unnecessary”.
According to Sewing, the job cuts are inevitable: “We have no other option”, the CEO told the station n-tv. “This bank must concentrate on its strengths. That’s what we’re doing now and that means closing businesses and cutting jobs.”
The group wanted to manage the restructuring with its own financial resources. They did not want to ask the shareholders for a capital increase and would return capital through the dividend. “In my opinion, this is good news for shareholders in the medium and long term,” says Sewing.
Stock market reacts positively
The stock market initially responded positively to the measures announced on Monday: The shares continued to develop positively and rose by 3.9 percent to 7.45 euros. However, experts advise caution with regard to the weak history.
Investment banking will be reduced and the focus will be on business with loans, bonds and currencies as well as strategic advice. At the same time, the Dax Group intends to withdraw from global equity trading. The existing balance sheet items of 74 billion euros shall be reduced in internal settlement units.
New business division
Business with corporate customers and the transaction bank in Germany will be merged into the new “corporate bank” division. The transaction bank would be responsible for worldwide payment transactions as well as securities and credit transactions for companies, financial institutions and other large customers.
In total, Deutsche Bank has planned 7.4 billion euros for the restructuring. As a result of the restructuring of the group, the bank has already slipped into the red in the second quarter of the current year. The balance sheet for the second quarter will be published at the end of July.
There will also be changes in the Executive Board: Three members of the Executive Board will leave their positions at the end of July. These are investment bank chief and Group vice chairman Garth Ritchie, private client chief Frank Strauß and Sylvie Matherat, who is responsible for regulatory issues.