Deutsche Bank to slash 18,000 jobs with London roles at risk

Struggling German bank says roles will go by 2022 in bid to cut costs

British headquarters of the German Deutsche Bank in London (EPA)

Germany’s struggling Deutsche Bank said on Sunday it would cut 18,000 jobs by 2022, downsizing its volatile investment banking division in a restructuring aimed at restoring consistent profitability and better returns to shareholders.

The Frankfurt-headquartered bank said it would cut roughly a quarter of its total annual costs, from 22.8bn euros (£20bn) last year to 17bn euros, through steps such as dropping the investment bank’s stock-trading business.

London is home to 8,000 staff and the firms biggest trading operation, although the exact locations of the job losses have not been announced.

The aim is to focus on areas where the bank is among market leaders, and on businesses with steadier earnings such as serving corporate customers.

For years, Deutsche Bank has wrestled with regulatory penalties and fines, high costs, weak profits and a low share price. The bank went three straight years without turning an annual profit before recording positive earnings of 341m euros for 2018.

CEO Christian Sewing took over last year and promised faster restructuring after predecessor John Cryan was perceived to have moved too slowly.

Deutsche Bank shares rose 2.5 per cent on Friday to 7.18 euros as markets anticipated a restructuring announcement. That is far below levels from mid-2015, when the shares traded over 30 euros per share.

The bank said one-time charges from the changes would mean a net loss of 2.8bn euros in the second quarter. Excluding the charges, net profit would have been about 120m euros.

The restructuring follows the failure in April of merger talks with German rival Commerzbank. Deutsche Bank said the combination would not make business sense.

As part of the restructuring the bank said it would create a separate unit to dispose of billions in investments that are less profitable or no longer fit its strategy. The bank said it did not expect to have to raise additional capital from shareholders.

When complete, the job cuts are to reduce the workforce to 74,000. The bank would not say where the cuts would fall; many of its investment banking activities are carried out in New York and London.

The bank paid billions in fines and settlements related to behaviour before and after the global financial crisis, including a $7.2bn (£5.7bn) settlement in 2017 with the Justice Department over selling bonds based on mortgages to people with shaky credit. But that hasn’t ended the negative headlines.

Two congressional committees have subpoenaed Deutsche Bank documents as part their investigations into Donald Trump and his company. Deutsche Bank was one of the few banks willing to lend to Mr Trump after a series of corporate bankruptcies and defaults starting in the early 1990s.

Mr Trump had sued Deutsche Bank to stop the subpoenas, but a judge in May ruled against the president.

AP