Scenes that London city workers hope they would never see again after the mass exodus from banks during the financial crisis has played out at Deutsche Bank’s UK head office today. The axing of 18,000 positions worldwide from the equities teams announced by Deutsche Bank is one of the most radical since 26,000 staff members lost jobs at Lehman in 2008. Some of the 7,990 London employees of Deutsche Bank, which is one of the biggest employers in the city of London have been told this morning to clear out their desks and leave. Staff were seen leaving the London office with thick white envelopes detailing their layoff packages; many looking visibly shaken. There were similar job losses in Tokyo, but London and New York as the trading centres of the investment bank, are expected to be hardest hit. The German workers appear not to be too worried about their overseas colleagues woes with a German public sector union, Verdi welcoming the decision of Deutsche Bank to shrink its investment banking business saying it will strengthen the bank and German jobs. Deutsche Bank’s strategic overhaul is seen by most analysts as a retreat from its global ambitions. Credit investors were buoyed by the move to exit the money-losing equities trading but the share prices which rose following the restructuring announcement dropped by 3.5% by midday as analysts questioned whether the newly announced targets will be tough to achieve. – Linda van Tilburg
Deutsche Bank to exit global equities, trading business
(The Wall Street Journal) – Deutsche Bank AG moved Sunday to gut its global ambitions as a trading powerhouse, cutting 18,000 jobs and retreating to its German banking roots in a radical overhaul to try to save itself after years of decline.
Deutsche Bank’s restructuring plan reorders the bank’s executive ranks under Chief Executive Christian Sewing, with several senior officials leaving and business lines redrawn for the third time in four years.
The moves are a dramatic capitulation 20 years after Deutsche Bank acquired Bankers Trust in the US, enabling a rising profile in bond trading and other areas that helped it compete with Goldman Sachs Group Inc. and other big US investment banks on the global stage.
“What we have announced today is nothing less than a fundamental rebuilding of Deutsche Bank,” Mr. Sewing wrote in a message to staff, adding that the changes “will bring us closer to our core strength, our DNA.”
The German lender’s struggles have been symptomatic of a broader malaise among Europe’s investment banks. Struggling with low interest rates and political uncertainty, Europeans are dominated by US rivals on their home turf.
Some European banking woes stretch back to the global financial crisis, after which US banks were forced to clean up quickly and recapitalise their balance sheets. European banks staved off that bitter medicine for years. Rapidly shrinking deal volumes and market volatility have compounded the problem. Bankers say companies are skittish about doing deals amid concerns over the European Union’s economic outlook, Britain’s exit from the EU and the trade war between the US and China.
Some European banks, Deutsche Bank most prominently, have tried to stanch the bleeding by exiting unprofitable business lines, pulling back from certain regions and focusing on businesses they hope will juice them back to more stable profits.
Deutsche Bank’s investment bank – long its dominant revenue engine – will be dramatically shrunk and reorganised with parts of it being put up for sale. Deutsche Bank is abandoning efforts to revive trading businesses that struggled to compete with stronger rivals.
The bank said on Sunday it would exit its global-equities sales-and-trading business completely, but will continue offering some services, such as share underwriting, to clients.
The efforts to peddle chunks of functioning operations reflect a stark turn for the European lender that for years has had the biggest global investment-banking ambitions.
“The markets have needed decisiveness and no longer incrementalism from Deutsche Bank. I believe Sewing is starting to express that,” said Gregg Hymowitz, chief executive of EnTrustPermal, a New York firm with money invested in Deutsche Bank. “There can be no sacred cows.”
The German bank said it expects to post a net loss of €2.8bn ($3.14bn) as a result of restructuring-related costs when it reports second-quarter results on July 24. It plans about 18,000 global job cuts by 2022. That represents about one out of five current full-time employees.
The lender, whose share price has been near a record low for months, will focus on serving European companies and retail-banking customers, including wealthy clients. It is aiming to strengthen businesses like asset management, currency trading, corporate-cash management and trade finance that support its narrower focus.
