Deutsche Bank’s Overhaul Cuts 18,000 Jobs
The Frankfurt Germany-based bank has started its major reconstruction. On Monday, the Deutsche Bank has laid off some of its employees.
The target of the bank is to cut 18,000 jobs by 2022. When the cut is finally complete, the Deutsche Bank is expecting to reduce its workforce to 74,000.
Deutsche Bank said that it will slash roughly a quarter of their total annual cost from 22.8 billion euros to 17 billion euros.
As part of their overall reconstruction, the bank is set to dismiss its global equities businesses. It also plans to reduce its fixed-income investments division. These areas were once regarded as the strongest parts of the German bank.
The plan is said to cost the bank 7.4 billion euros or approximately 8.31 billion US dollars.
Majority of the 18,000 job cuts were expected in European and American offices, but the cuts also hit Asian offices. However, the bank did not give an official breakdown on where and what branches will be affected.
The Deutsche bank has been struggling for years with regulatory penalties and fines, low stock prices, weak profits, and high costs.
During their pre-crisis peak, the German bank’s shares reached 112 euros, far from this Friday’s close of only 7 euros.
The bank has also seen three (3) consecutive years without turning their annual profit. And just last year, the bank finally saw positive earnings of 341 million euros.
The bank’s shares have already increased for about 16% over the past month after its CEO Christian Sewing announced in a shareholder meeting that there will be “tough cutbacks”.
Sewing replaced John Cryan, the former CEO of Deutsche bank. Cryan was criticized because his move to recovery was “too slow.” Sewing now promises a faster overhaul for the German-bank.
The reconstruction followed the failed attempt of the Deutsche Bank to merge with its German rival, Commerzbank. Commerzbank AG is also based in Frankfurt, Germany and is currently the country’s second-largest bank.
The Aftermath
Employees of the Deutsche bank braced for impact. Stories of those who have been laid off by the German-based bank has been circulating around the press.
In a report, bankers were seen leaving their offices on Monday after the management has cut them.
A man who previously worked for the bank was interviewed but declined to give his name. The former employee said that the mood in the office seemed to be gloomy the whole morning.
People were waiting for their names to be called by the HR, others were already saying their goodbyes even before they were called.
As soon as they were called on, HR would have a talk to them. A packet will be then given by the HR and the bankers were said to be escorted out of the building.
The man also added that some were not even allowed to get back to their desks and were immediately asked to leave the building.
A reporter said that he has seen three (3) women leaving their offices while holding large envelopes with the Deutsche bank’s logo. Before the women left, they took a selfie in front of the building.
A letter from the Deutsche Bank CEO Christian Sewing said that the bank acknowledges that this cut will have an impact on people’s lives in a profound way.
