Deutsche Bank to shed 35,000 jobs over 24 months

Regarding what groups will get hit the hardest FT coverage is saying 4 of the 9k jobs will be lost in Germany and that "To help it cut its balance sheet, Deutsche will stop various activities in its flagship IBD, including high-risk weight securitised trading and market making for uncleared credit default swaps."

Ouch.

FT:

Deutsche Bank to cut 9,000 jobs and exit 10 countries in overhaul

http://www.ft.com/cms/s/0/1450cf0c-7e0f-11e5-98fb-5a6d4728f74e.html#ixz…

Last updated: October 29, 2015 12:34 pm James Shotter in Frankfurt and Jennifer Thompson in Hong Kong

Deutsche Bank is to withdraw from 10 countries and cut 9,000 jobs as part of a sweeping strategic overhaul designed to help restore the German lender’s flagging fortunes.

The bank declined to say which parts of its business would be most affected by the cuts, which amount to a 9 per cent reduction in Deutsche’s staff, but said that 4,000 of the job losses would be in Germany.

The move comes after a torrid few months for Germany’s biggest bank, which was hit by a $2.5bn fine for its involvement in the Libor scandal in April, lost one of its co-chief executives, Anshu Jain, in July, and is now embroiled in a burgeoning scandal over its Russian business.

The five-year plan, the broad outlines of which were set out in April, was unveiled by John Cryan, who replaced Mr Jain in July and will take sole control of Deutsche when co-chief executive Jürgen Fitschen steps down next year.

Mr Cryan said that he wanted to lead the bank in a more “disciplined and focused way”. However, he cautioned that turning round the bank would be a painstaking process, and implied that Deutsche had less room for manoeuvre than some of its peers, such as UBS and Barclays, which have already made big cuts to their investment banking businesses.

“We can’t change the strategy much . . . We have to work with what we are,” he said, adding that he did not expect 2016 and 2017 to be “strong years”.

Investors were not initially won over by the plan, which Deutsche said on Wednesday night would also involve suspending dividend payments for this year and next. Shares in the bank were down 5.7 per cent in midday trading in Frankfurt.

Helmut Hipper, a portfolio manager at Union Investment, one of Deutsche’s top 20 shareholders, said the key question was what impact the job cuts and asset reductions would have on Deutsche’s earnings potential.

“At the moment there is no answer, hence the scepticism in the capital market. It would be a very positive signal if Deutsche Bank were to rule out a capital increase as part of this plan,” he said.

In addition to the cuts in its own staff, Deutsche also aims to slash by 6,000 the 30,000-strong army of external consultants that the bank uses in areas such as IT. Through selling its Postbank subsidiary the bank will shed another 19,000 staff.

Deutsche will also cut its balance sheet, shrinking its risk-weighted assets from €416bn at the end of June, to about €320bn by 2018, and €310bn by 2020, excluding the impact of regulatory changes.

The bulk of Deutsche’s market exits will come in Latin America, where it will cease operations in Argentina, Chile, Peru, Mexico and Uruguay, as well as shifting its Brazilian trading operations to other “global and regional centres”.

In Europe, Deutsche will withdraw from Denmark, Finland, Norway and Malta. It will also leave New Zealand.

The bank also said it would cut the number of clients in its investment banking business by about half, particularly in high-risk countries.

To help it cut its balance sheet, Deutsche will stop various activities in its flagship investment banking division, including high-risk weight securitised trading and market making for uncleared credit default swaps.

Mr Cryan wants Deutsche to achieve a core tier one capital ratio — a key measure of financial strength — of 12.5 per cent by 2018, a more ambitious goal than the 11 per cent targeted in April by Mr Jain. At the end of the third quarter, during which Deutsche made a €6bn net loss, the ratio was 11.5 per cent.

The job cuts are intended to help Deutsche reduce its cost base, excluding items such as restructuring and litigation, to less than €22bn by 2018, down from €27.7bn at the end of 2014.

The staff that remain at the bank may also see their bonuses cut, Mr Cryan warned, especially for this year, as the bank is expected to make a full-year loss.

The problem with these articles is that they lump everything into IB. Anything from S&T to risk management is usually classified as "IB" by these articles. What we know as IB will probably not be affected as much.

Their IB business is actually growing:

"Executives said they also plan to hire in areas where they’re investing, including parts of the investment bank and asset-management business."

S&T already got cut there and it's still very lean. IB is growing there though, last I heard.

What's people thinking on Graduate program hires given all this?