Deutsche Bank to shed 35,000 jobs worldwide in major overhaul
30 October 2015
German banking major Deutsche Bank is shedding 35,000 jobs, which will include outright reduction of 15,000 jobs and offloading assets with some 20,000 staff, in a major overhaul aimed at improving performance and profitability of the bank.
Under the new chief executive John Cryan's revamp plan, Germany's biggest bank will forego its 2015 and 2016 dividends to bolster finances and retain money to clean up its books.
Since the group has reported a loss in 2015, the bank's supervisory board will also discuss if it will be appropriate for the board to pay bonuses.
"I do not think that 2016 and 2017 will be strong years," Cryan told reporters on Thursday.
Faced with costly litigation from past scandals and fallout from a market rout in Asia pushing its valuation well below rivals, Deutsche Bank is under pressure to overhaul operations.
"Deutsche Bank does not have a strategy problem. We know exactly where we want to go. But we have had a grave problem in implementing it," Cryan said, addressing reporters in German.
Cryan said staff will feel the pain. "I have said that it would not be all sweetness and light," he said, adding it would be unacceptable not to share some of the cost of the settlement of interest-rate rigging and consequences of poor past behaviour.
Co-CEO Juergen Fitschen acknowledged the bank has not yet done enough in changing its behavioural culture. "Cultural change ... it needs to be filled with content. What we have brought about is only the beginning," Fitschen said.
The lender is to axe 9,000 full-time jobs and 6,000 external contractor positions. Three quarters of the other 20,000 jobs to go are at retail unit Postbank, which Deutsche Bank is spinning off.
"We were concerned that our shareholders thought cost-cut goals were not ambitious enough. We think they are realistic based on the need to remain competitive," Cryan said.
"We think we should retain capital in order to strengthen the company. Because we have to run business on the basis that we could encounter stress. We need to build a buffer above the minimum."
Deutsche Bank is targeting a reduction of its risk-weighted assets to about €320 billion ($349 billion) by end-2018 from €416 billion at the end of June.
"The plan is based on the elimination of the Deutsche Bank common share dividend for the fiscal years 2015 and 2016," it said in a statement, adding it aimed to resume paying dividends thereafter.
The bank also said it was aiming to bring down adjusted non-interest expenses to less than €22 billion by 2018 from 23.8 billion in 2014, and to reduce its cost/income ratio to 70 per cent in 2018 from 84.3 per cent at the end of June.
Deutsche Bank, meanwhile, saw a 20 per cent increase in revenue in its bond trading business in the third quarter, helping it to reduce the impact of a record 6 billion euro group pretax loss.
Revenue at its corporate banking and securities business rose 2 per cent to 3.2 billion euros, helped by higher revenue in rates, credit and distressed and emerging markets.