Deutsche Bank to Cut Corporate and Investment Banking Jobs: Layoffs Follow Third Consecutive Annual Loss

Deutsche Bank to Cut
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Deutsche Bank AG (NYSE:DB), a financial services company, is cutting at least 250 jobs globally. The Deutsche Bank layoffs are supposed to impact its corporate jobs and investment banking jobs in locations including London and the United States. These job cuts are an effort to hide expenses amid a continuous slide in the bank’s securities unit.

The job cuts at Deutsche Bank are expected to rise to more than 500, targeting the senior and mid-level investment banking positions. People familiar with the situation said the bank reduced senior and mid-level investment banking positions in locations including the U.S. and London in the past two weeks. They include Evans Haji-Touma, who looked after sovereign wealth and public pension funds, and Marc Benton, who supervised European energy investment banking.

Besides these, the corporate finance unit for Europe, the Middle East, and Africa, led by Alasdair Warren, also experienced layoffs. Deutsche Bank’s corporate and investment banking division had 17,251 front-office full-time employees at the end of last year. But the main problem is in the bank’s trading business, where fixed-income revenue declined by 29% and equities fell by 25% in the last quarter.

Deutsche Bank Reported Third Consecutive Annual Loss

Deutsche Bank reported its third consecutive annual loss, which stands at about $625.0 million. After struggling hard in the fourth quarter, the bank was hit by the challenging market, a decline in its investment revenue, and the U.S. tax reform.

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Deutsche Bank CEO John Cryan had this to say: “Only a charge related to U.S. tax reform at the end of the year meant that we had to post a full-year after-tax loss. We believe we are firmly on the path to producing growth and higher returns with sustained discipline on costs and risks.”

Cryan, who joined the bank in 2015, said he aims to bring Deutsche Bank to a position where it could achieve its full potential, a process that would take more than two or three years. He implemented many measures to reduce costs, including hundreds of bank closures and thousands of job cuts.

However, the bank’s share declined six percent in Frankfurt and the tax charge resulted in a loss of $2.8 billion in Q4. Deutsche Bank’s total revenue dropped 12% in 2017.

Job Losses at Deutsche Bank Due to Automation

According to recent research at Oxford University, it is estimated that 47% of U.S. jobs could be taken over by automation within the next 20 years. Cryan recently signaled that automation in the banking sector might replace many of the bank’s back-office jobs. In 2015, the bank announced it would cut 9,000 jobs as a part of a five-year restructuring plan. Only 4,000 Deutsche Bank job cuts have been reported so far.

Cryan is of the view that entire industry could be replaced by robots. He said that the bank needs to find new ways of employing people and that people must also find new ways to spend their time. He said the shift of consumers toward online banking is reducing the footprint of the brick-and-mortar branches; hence, there is no need for many of them. “The truthful answer is we won’t need as many people,” he concluded.

The rise in automation will threaten many jobs in the future. Jobs at Deutsche Bank are among the list of positions at risk.

Sources

Deutsche Bank to Cut at Least 250 Banker Jobs,” Bloomberg, February 19, 2018.

Deutsche Bank to clip investment banking wings,” DW, February 19, 2018.

Deutsche Bank hasn’t made a profit in 3 years,” CNNMoney, February 2, 2018.

Deutsche Bank reports third consecutive annual loss,” Reuters, February 2, 2018.

Deutsche Bank CEO suggests robots could replace half the company’s 97,000 employees,” CNBC Make It, November 8, 2017.

Deutsche Bank boss hints at thousands of job losses,” DW, November 8, 2017.

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