The German bank WestLB, which was hit earlier this year by a regulatory investigation of its principal finance business headed by Robin Saunders, scaled up its redundancy programme to 1,800 job cuts yesterday in an effort to slash costs.
The bank, which unveiled a €1.7bn (£1.2bn) loss last year, partly caused by losses at Ms Saunders' division, said it would reduce its head count from 8,000 to 6,200 by the end of 2005 to try to reduce annual costs by €500m.
The job cuts will come from disposals of businesses as well as from redundancies in its German homeland and elsewhere. Most cuts are likely to be in outposts of WestLB's empire, such as parts of its Asian and American arms, which it no longer regards as core.
The bank has also put Panmure, its UK brokerage, up for sale and is thought to have already spoken to the business' management about a possible buyout. Rival brokerages such as Bridgewell Securities and Teather & Greenwood are also thought to be interested.
Ian Dighe, Bridgewell's chief executive, said: "We look at every opportunity to accelerate the growth of our business. We've always admired the Panmure people and the Panmure franchise".
WestLB has been under a cloud since BaFin, the German banking regulator, said it was investigating the way the bank managed its risk after it plunged to a loss in May. However, WestLB has also suffered problems that are endemic to German banks, where demand among customers has been sluggish while the structure of the market makes means profit margins are very slim on many retail banking lines of business.
The German banks have begun to slash their head counts to try to deal with the problems. Dresdner, owned by the German insurer Allianz, is cutting 14,500 jobs by 2005. Its larger rival Deutsche has also tightened its belt.
WestLB, as the country's largest state-controlled bank, has so far escaped some of the difficulties facing rivals as its status means it can borrow money more cheaply. But the bank is none the less attempting to make itself more profitable because the state subsidy is set to come to an end.Reuse content