Up to 1,900 jobs may be lost at Deutsche Bank's investment banking side, as many as half of them in London, as part of a review launched by its chief executive, Josef Ackermann.
Speaking at an investor conference in London, the Deutsche boss vowed last week to improve profitability and returns on equity. He has promoted Anshu Jain, the head of fixed interest at the investment bank, to take control of the entire corporate banking and securities business.
Mr Jain is conducting a root and branch review of the business, the results of which will be with Mr Ackermann before the end of the year. However, it has already emerged that Mr Jain has been set a target of saving €500m (£345m) a year in costs. Calculations made by analysts at JP Morgan indicate this would mean cutting 1,900 of the 9,800 staff employed in this division.
A large proportion of these job losses would be in London. Although Deutsche is a German bank, its European investment banking business is run from London. The business recently moved into flash new offices specially built for it on London Wall. The division also has a large operation in New York.
Dramatic cost cuts at Deutsche would have a major effect on the market for investment bankers and traders, as the bank is known as one of the best payers in the City. The cutbacks could be even more dramatic than the closure of Morgan Grenfell's securities business in 1988, when 450 jobs were lost in one day. Subsequently, Morgan Grenfell was taken over by Deutsche.
The JP Morgan note points out that Deutsche is far less efficient that its rivals. Its cost/income ratio for corporate banking and securities was 73 per cent in the second quarter of this year, compared with 67 per cent for JP Morgan and 56 per cent for Citigroup, its clearest competitors.
Last month Mr Ackermann hosted a two-day conference for senior executives of the bank, in Nice. The meeting showed the determination of the Swiss-born chief executive to get his teeth into Deutsche's problems, after the distraction of seven months in a Düsseldorf criminal court defending himself against corporate greed charges. These related to Vodafone's purchase of Mannesmann in 2000; the Deutsche boss acted as an adviser to the German telecoms company.
Mr Ackermann signalled a further shake-up at the bank, concentrating on its wholesale and investment business. He moved corporate finance chief Michael Cohrs to head of transaction banking, replacing Jürgen Fitschen, who was put in charge of the German banking side. The head of equities, Kevin Parker, was moved to run asset management.Reuse content