Cross-posted from Zerohedge
As part of its latest disastrous earnings, which saw trading revenues tumble by 17% as new CEO Christian Sewing took over, we reported that Deutsche Bank announced a sweeping restructuring plan, abandoning its long-running ambitions to be a top global securities firm, scaling back U.S. rates sales and trading, reducing the corporate finance business in the U.S. and Asia, and reviewing its global equities business with a view toward cutting it back, the bank said in a statement. The measures will lead to a “significant reduction” in the 97,130-person workforce this year, Deutsche Bank said. We translated it more simply: massive layoffs.
Predictably, the German bank wasted no time, and according to Reuters and Bloomberg, the purge began overnight when Deutsche fired 300 U.S.-based investment bankers on Wednesday with another 100 pink slips expected over the next 24 hours.
In total, the biggest German bank plans to cut more than 1,000 jobs, or over 10%, of total US jobs in its initial restructuring phase. According to Bloomberg, the US hosts about 10,300 Deutsche Bank employees, or about a tenth of the firm’s global workforce.
In his earnings call comments, CEO Sewing stopped short of disclosing how many of the bank’s 97,103 jobs would be let go…
… while CFO James von Moltke also gave few clues as to how much of its massive 1.4 trillion euro ($1.7 trillion) balance sheet would be shed in the process. Von Moltke estimated restructuring costs for 2018 would rise to 800 million euros, up from an earlier estimate of 500 million euros, according to Bloomberg.
“These cutbacks will be painful, but they are unfortunately unavoidable if we want to be sustainably profitable in the best interests of our bank, our clients and our investors,” Sewing said.
As noted earlier, the bank plans to reduce its activities across the board in the U.S. including rates sales and trading and corporate finance. Areas where the investment bank still believes it can grow globally include foreign exchange, commercial real estate and structured equity financing, Garth Ritchie, head of the investment bank, said in a memo to clients obtained by Bloomberg.