This article is from the source 'guardian' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.

You can find the current article at its original source at https://www.theguardian.com/business/2019/jul/08/deutsche-bank-jobs-staff-london

The article has changed 5 times. There is an RSS feed of changes available.

Version 2 Version 3
Deutsche Bank starts cutting London jobs with 18,000 at risk worldwide Deutsche Bank starts cutting London jobs with 18,000 at risk worldwide
(about 7 hours later)
Deutsche Bank has started cutting jobs in London as part of a plan to reduce its global workforce by 18,000 to try to revive its ailing fortunes. Deutsche Bank started slashing thousands of jobs in the City of London and in New York only hours after announcing a drastic plan to reduce its global workforce by 18,000.
Germany’s biggest bank employs about almost 8,000 people in the UK with 7,000 in London, which is one of the hubs for the equities trading division it is scrapping. The bank is understood to be cutting hundreds of London jobs immediately in the first phase of reductions over three years. Germany’s biggest lender employs almost 8,000 people in the UK, with 7,000 in London, which is one of the main hubs for its global investment bank, where the bulk of the job losses will be focused. The jobs being cut make up about a fifth of Deutsche’s global workforce of 91,500.
Some staff in London were reported to be in tears after hearing their jobs had gone. Workers started leaving the bank’s building in the City around 10am carrying bags of belongings. Some said they were told their passes would stop working at 11am. Some staff in London were reported to be in tears after hearing that their jobs had gone. Workers started leaving the bank’s building in the City at around 10am carrying bags of belongings. Some said they were told their passes would stop working at 11am.
Deutsche Bank staff sent home as 18,000 job cuts begin - business liveDeutsche Bank staff sent home as 18,000 job cuts begin - business live
A male contractor on his way into the building in Great Winchester Street said: “The bank is not doing well so they have to do something to get back up and running.” A male contract worker on his way into the building in Great Winchester Street said: “The bank is not doing well, so they have to do something to get back up and running.”
The jobs being cut make up 20% of Deutsche’s global workforce and will hit its investment bank hard. The chief executive, Christian Sewing, promised “tough cutbacks” to the investment bank in May as part of €1bn (£880m) of cost reductions – the latest round in a series of cuts. Deutsche has failed to recover from the financial crisis of 2008 and, faced with rising costs and a falling share price, Deutsche’s chief executive, Christian Sewing, is shutting the division that sells and trades shares and cutting back on the bank’s other businesses. The shares, which peaked at €110 in 2007, have crashed to less than €7, and lost another 5% when details of the job cuts were revealed.
Deutsche Bank announced the job cuts on Sunday but gave no breakdown of where they would take place. The cuts are likely to be heaviest in Europe and the US where its investment bank employs thousands of people. Job reductions will affect support staff in areas such as IT and compliance as well as frontline traders. The cull started in the Asia Pacific region, soon after the cuts were confirmed on Sunday evening in Europe, with employees being let go in Sydney and Hong Kong. A Hong Kong equities trader told Reuters the mood was gloomy as people were called individually to meetings. “[There are a] couple of rounds of chats with HR, and then they give you this packet and you are out of the building,” the trader said.
The cull started in the Asia Pacific region, with employees being let go in Sydney and Hong Kong. A Hong Kong equities trader told Reuters the mood was gloomy as people were called individually to meetings. In New York, hundreds of workers were summoned to the cafeteria at Deutsche’s Wall Street office to hear their fates. Employees were seen leaving with their redundancy terms in large white envelopes. Staff at the nearby Full Shilling Irish bar were expecting laid-off Deutsche workers to congregate in the afternoon.
“[There are a] couple of rounds of chats with HR and then they give you this packet and you are out of the building,” the trader said. After suffering big losses in the wake of the financial crisis and also in four of the past five years, Deutsche Bank’s problems have raised fears about its future among German government ministers. Berlin encouraged it to discuss a merger with its German rival Commerzbank, but talks ended in April, leaving Sewing to look for other means to safeguard the 149-year-old bank’s future.
The cuts will undo decades of expansion as Deutsche tried to compete with Wall Street firms in investment banking. Deutsche has struggled to cope with extra costs imposed by regulators since the financial crisis, turning its once powerful investment bank into a major burden. Sewing, who travelled to London to announce the cuts outlined on Sunday, expects to spend €7.4bn in order to cut the bank’s annual running costs by €6bn a year by 2022.
Deutsche has also suffered from a string of scandals caused by lax controls during the boom years and has come under scrutiny over its business dealings with Donald Trump. Deutsche is also separating €74bn of bad loans and risky derivative contracts into a so-called bad bank, to be run down or sold to banks under less pressure. Sewing also pledged to invest an extra €13bn in technology and increase revenue in the core bank.
Sewing said he regretted the cuts but he believed the bank had tried to do too much and had to cut back to revive itself. He said the investment bank would rely less on sales and trading of shares and fixed-income products to make it viable. He promised not to ask shareholders for fresh funds. They have already stumped up almost €30bn in the past decade, only to see the company’s market value plunge to half that amount.
“We tried to compete in nearly every area of the banking market at the same time,” Sewing said on a conference call. Analysts at the US bank JP Morgan said Deutsche’s plan was “for the first time not half-baked”. But they also pointed out the bank’s poor record on executing plans, and questioned how motivated investment bank employees would be to revive the remaining business. Deutsche indicated that it could post another loss this year. It has already been through a series of attempted revamps, but without the big overhauls put in place by rivals such as Royal Bank of Scotland.
Deutsche said its slimmed-down corporate bank would keep a significant business in London, where it is constructing a new headquarters. The bank has given no breakdown for the job cuts, but they are likely to fall most heavily in Europe and the US, where its investment bank, which has 38,000 workers, employs thousands of people. Job losses will affect frontline traders and support staff in areas such as IT and compliance.
The cuts will undo decades of expansion as Deutsche tried to compete with the biggest Wall Street firms such as Goldman Sachs. It made bold moves in the late 80s and 90s, buying Morgan Grenfell in London and Bankers Trust in the US.
Deutsche earned the grudging respect of Wall Street rivals during the boom years leading up to the financial crisis, but the bank, which was a big player in the mortgage bonds at the centre of the US subprime crisis, struggled in the aftermath. It failed to absorb extra costs imposed by regulators after the crisis, turning its once powerful investment bank into a burden.
Deutsche has also been at the centre of a string of scandals caused by lax controls during the boom years and has come under scrutiny over its business dealings with Donald Trump. Bankers Trust was the only New York bank prepared to lend to Trump in the 90s. Congress and New York state are investigating Trump, his family and Deutsche.
The bank paid billions of dollars in fines and settlements related to failings before and after the 2008 financial crisis. It agreed a $7.2bn settlement with the US Department of Justice in 2017 in connection with selling bonds backed by mortgages lent to people with bad credit histories. More than $4bn of that sum was earmarked for homeowners who had lost out as a result of Deutsche’s dealings.
The job cuts will be some of the biggest since the bankruptcy of Lehman Brothers in 2008 put 26,000 people out of work. Deutsche’s woes also show that the financial crisis is continuing to reverberate more than a decade after its peak.
Sewing, who joined Deutsche as an apprentice 30 years ago aged 19 and is the bank’s fifth chief executive since 2008, said he regretted the cuts, but drastic action was needed after his predecessors’ careless expansion. He said the investment bank would now rely less on sales and trading of shares and bonds to make it viable.
“We tried to compete in nearly every area of the banking market at the same time,” Sewing said. “Too many resources went to businesses where we don’t compete to win … Parts of our investment bank have been a drag on our results for years.”
Deutsche said a slimmed-down corporate bank would keep a significant business in London, where it is currently constructing a new City headquarters. Sewing said Deutsche could continue to advise on flotations and other share issues for corporate clients without an equities trading division.
Deutsche BankDeutsche Bank
BankingBanking
Financial sectorFinancial sector
European banksEuropean banks
EuropeEurope
GermanyGermany
RedundancyRedundancy
newsnews
Share on FacebookShare on Facebook
Share on TwitterShare on Twitter
Share via EmailShare via Email
Share on LinkedInShare on LinkedIn
Share on PinterestShare on Pinterest
Share on WhatsAppShare on WhatsApp
Share on MessengerShare on Messenger
Reuse this contentReuse this content