Daily Management Review

Deutsche Bank Initiates 18,000 Job Cuts Globally, Shares Rise


Deutsche Bank Initiates 18,000 Job Cuts Globally, Shares Rise
A major overhaul of Deutsche Bank was initiated on Monday with the investment bank’s planned cutting of 18000 jobs globally which is the biggest reshuffling and reorganization within the bank since the last global financial crisis.
The announcement for the cutting of the jobs was made by the lender on Sunday and the cuts a part of a 7.4 billion euros ($8.3 billion) restructuring plan that it has created for itself. Analysts believe that the restructuring would be undoing the work that the lending bank has been doing for years to become a leader at Wall Street. The restructuring plan of the bank would also include the it quitting its global equities business and cut some operations in its fixed income – which has been an area of strength for the bank.
The announcement of job cuts on Sunday saw the share of the bank being increased by more than 3 per cent in Frankfurt.
The restructuring was described as a “restart” for the bank by Deutsche Bank CEO Christian Sewing. The bank would go into loss in the current year because of the restructuring, Deutsche said. That would mean four years of losses out of five in the last five years. The company said nothing about when it would return back on the profit path.
The plans was described as “bold and for the first time not half-baked” by analysts at JPMorgan. However the analysts also said that there were some unanswered questions such as those related to the credibility of execution, revenue growth details and employee motivation.
There would be “significant challenges” for the bank to the swift implement the restructuring plan, believes ratings agency Moody's and added that its negative outlook on the German bank would be retained by it. “It's a risky manoeuvre, but if it succeeds, it has the potential to bring the bank back on course,” said a person close to one of the top 10 biggest shareholders according to the media.
No details of the geographic regions where the job cuts would be done was not provided by Deutsche Bank even though analysts expect that the majority of the job cuts would take place in the United States and European operations of the bank. On Monday, the bank initiated the job cuts in Sydney, Hong Kong and at other locations in the Asia-Pacific region.
Reuters quoted Deutsche Bank employees leaving office in Sydney on Monday as saying that they had been laid off but said nothing that can lead one to contemplate whether they would be called back again later or they had in fact signed redundancy packages with the company. Report from Australia also said that the bank had disbanded four-strong equity capital markets (ECM) teams. However the reports also confirmed that most of the members of teams associated with the mergers and acquisitions (M&A) business of the bank had not been affected.
According to reports, there were about 4700 employees of the bank in its main regional offices in Sydney, Tokyo, Hong Kong and Singapore.