Deutsche Bank Profit Drops, Plans Job Cuts

German investment bank and financial services company Deutsche Bank will make ‘significant’ job cuts particularly in the United States and Asia, at it scales back its corporate and investment banking operations.

Deutsche Bank will scale back US rate sales and trading, reduce the corporate finance business in the US and Asia, and review its global equities business with a view towards cutting it back.

The plans were announced Thursday after the company’s first-quarter earnings. Dekabank Deutsche Girozentrale bought 22.46 million shares as the company’s stock fell 28.95 in the market.

The bank lost more than 80 percent of its net profit at 120 million euros compared to 575 million in 2017. In the first-quarter of 2018, its net revenue fell 5 percent at 7.0 billion euros.

The bank currently has 10,000 employees in the US, with the majority being employed in corporate and investment banking. On the other hand, there are currently 21,000 employees in Asia-Pacific.

Overall, Deutsche Bank has 97,000 employees. 40,000 of them are in the corporate and investment banking arm.

The company’s new chief executive Christan Sewing stated that the job cuts are ‘painful but regrettably unavoidable to ensure the bank's competitiveness in the long run.’ Restructuring costs for 2018 are expected to rise to 800 million euro from an earlier target of €500 million euro.

Focusing on Europe

He also said, "Deutsche Bank is deeply rooted in Europe - here we want to provide our clients access to global financing and treasury solutions. This is what we will focus on more decisively.”

Deutsche Bank said yesterday that it wants to focus its corporate finance business on industries that align with its Euro- pean clients or areas where it has a leadership position.

“We believe it is the right strategy especially taking into account the poor results,” said Kian Abouhossein, an analyst at JPMorgan Chase & Co. “What the restructuring is missing is details for now.” 

Abouhossein previously urged Deutsche Bank to cut back its investment banking operations in the US, as they were not profitable enough.

Bankers said that the expected results of the measures are job losses, high restructuring costs, and include a scaling-back of Deutsche Bank’s business with hedge funds, coming after a review of the investment bank known internally as Project Colombo, which could yet lead to further cuts.

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