City of London braced for major job losses at Deutsche Bank

Germany’s biggest bank warns it willd drop dividend for two years, axe 15,000 jobs and sell businesses employing 20,000 others

Heavy job losses are feared in the City of London after Deutsche Bank set out plans to boost its performance by axing 15,000 roles and selling off operations employing a further 20,000.

The move comes as the new boss, John Cryan, conceded that Germany’s biggest bank would not pay a dividend for two years as it battled to restore its fortunes after being stung by legal costs and fines. The bank also faces investigations over alleged Russian money laundering.

Cryan previously announced a restructuring of the investment bank, which employs thousands in London’s financial district, after a €6bn (£4.4bn) loss in the third quarter. The loss was caused by the sale of its Postbank retail banking division, a €600m writedown on the value of its 20% stake in China’s Hua Xia Bank, and €1.2bn in litigation costs.

Deutsche will close operations in 10 countries – Argentina, Chile, Mexico, Peru, Uruguay, Denmark, Finland, Norway, Malta, and New Zealand – and halve the number of customers in its investment bank, where 30% of clients produce 80% of the revenue.

Approximately 15,000 roles will go, including 6,000 contractors, while the workforce will fall by a further 20,000 as businesses are sold off. The aim is to achieve savings of €3.8bn although the changes will cost up to €3.5bn to implement. According to reports, the 9,000 full-time roles being lost equates to 10% of the workforce, while the number of contractors targeted equates to 20% of the total.

Cryan promised to tackle the job cuts sensitively. “This is never an easy task, and we will not do so lightly,” he said. There was little detail about where the job cuts might fall, although 4,000 of the 9,000 full-time roles are to be lost in Germany.

Bonuses are also thought to be in the firing line after the results which were described as “highly disappointing” by Cryan.

A British banker, Cryan became chief executive in July, replacing Anshu Jain, who spent 20 years developing a major investment banking operation.

Reuters reported that Cryan delivered his presentation in German, in contrast to Jain who had faced criticism for speaking English.

The bank’s shares fell 7% on disappointment about the results and the scale of the project to restore the fortunes of the German bank.

Ratings agency Standard & Poor’s said: “We believe Deutsche Bank’s strategy has the potential to deliver a more sustainable business model and stronger balance sheet. However, the bank faces an extended restructuring period and requires disciplined execution to achieve its ambitions amid ongoing regulatory and legal challenges”.


Jill Treanor

The GuardianTramp

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