– Deutsche Bank To Fire Another 10,000 Bankers, Bringing Total Layoffs To 20% Of Workforce:
The hits for Deutsche Bank just keep on coming. One day after a report that the German lender has imposed a hiring freeze in the latest bid to reassure investors that it has expenses under control and is stemming the outflow of cash, moments ago Reuters reported that Deutsche Bank’s finance chief told his staff that job cuts at the bank could be double that planned, a step that could remove 10,000 further employees.
Such cuts would likely take many years but setting such a goal could reassure investors that the bank is determined to tackle costs that sources said the European Central Bank sees as bloated. Unless, of course, they are forced to cut much faster. If 10,000 job losses were ultimately to follow the 9,000 announced by management in October 2015, roughly one in five of the bank’s workforce around the globe would be affected.
“Schenck said that the bank would need to cut another 10,000 staff to bring down costs,” said a person who attended the meeting with the chief financial officer cited by Reuters. Although no such decision has yet been taken, Marcus Schenck’s remarks, at an internal meeting, signal the lender is considering further significant cost cuts, as it faces a multi-billion-euro fine and a crisis of confidence among investors.
The discussion about further job cuts comes as Deutsche’s chief executive, John Cryan, reassesses a year-old strategy to revive the flagging group, as ebbing market confidence sends its stock price tumbling and prompts some customers to withdraw funds.. A second person familiar with these discussions said the management was also examining the countries where the bank was active to see “whether it was really worth its while (staying in those countries)”.
DB’s latest announcement follows Commerzbank, Germany’s second biggest bank rival, which recently announced it would ax more than a fifth of its workforce – almost 10,000 staff.
Still, it is not clear if DB can achieve the cuts: given potential high severance costs and revenue losses, it remains unclear whether a further attempt by Deutsche to trim staff can be achieved. Headcount has actually risen at the bank, despite the plans announced by Cryan in October 2015 to slash staff. Employee numbers, which stood at more than 101,300 in the middle of this year, are higher than the roughly 98,600 one year earlier.
One hurdle in removing staff is that many are based in Germany, where strict labor law makes it difficult and expensive to fire employees. Of the 9,000 job cuts announced in October 2015, 4,000 are in Germany.
In Germany, unlike Britain, for instance, labor representatives have an important say and appoint non-executive directors to Deutsche’s supervisory board. They will argue for fewer cuts.
Additionally, DB’s layoffs are getting to the point where it is now cutting into the muscle, and any additional terminations could result in a drop in revenue. Regardless of this, however, the heavy fine demanded by the U.S. authorities could prompt Cryan to act.
Once Germany’s only bank to go head-to-head with U.S. rivals on Wall Street, stricter regulation, rock-bottom borrowing costs and still heavy costs has squeezed Deutsche’s profits. Politicians in Germany, who are preparing for national elections in 2017, are watching developments nervously.
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