Deutsche Bank to cut thousands of jobs

Deutsche Bank entered a new round of cost-cutting which will witness the elimination of thousands of jobs, the Frankfurt-based bank's new chief executive officer (CEO) Christian Sewing told investors on Thursday.

Speaking at the annual general meeting of Germany's largest financial institute, Sewing announced that the number of staff would fall from currently around 97,100 to significantly below 90,000 in the coming years.

"The reduction in headcount is unavoidable if our bank is to return to a sustainable path of profitability", the CEO argued.

Sewing emphasized, however, that the corporate reforms at the Dax-listed company would take the German tradition of cooperative relations between employer- and employee representatives into account. Rather than resorting to the mass lay-off of staff, employment figures would also be lowered through a freeze on new hires.

He said that much of Deutsche Bank's down-sizing efforts will affect its trading division where around 25 percent of jobs are scheduled to be cut. Additionally, the institute will reduce its presence in the hedge fund business.

"We need to focus on what we are good at", Sewing explained. In the future Deutsche Bank intends to place a greater emphasis on its European home market, reducing its investment- and retail banking presence in the U.S. in particular.

Generally, Deutsche Bank would have to lower its costs "faster and more decisively", for example by embracing more automation in its operations. Sewing estimated that the far-reaching personnel and structural changes announced by his company would at least initially lead to additional costs of 800 million euros (937 million U.S. dollars) in the 2018 fiscal year.

The CEO has described the current level of returns at Deutsche Bank as "simply unacceptable." Total profits at Deutsche Bank in Q1 2018 fell to 120 million euros compared to 575 million euros during the same period last time. At the same time, quarterly revenue shrank by around five percent to 7 billion euros.

Sewing joined Deutsche Bank in his teens and was recently named as the successor to embattled ex-CEO John Cryan by the supervisory board. Despite launching an ambitious corporate restructuring program after joining as CEO in 2015 himself, Cryan faced increasing criticism for allegedly failing to return the bank to financial health.

Not least due to several expensive legal settlements in connection to fraudulent behavior, Deutsche Bank has written heavy losses for the past three consecutive years. Cumulative annual losses since 2015 currently stand at 9 billion euros.

Speaking ahead of Deutsche Bank's upcoming annual general meeting (AGM), Hermes chief executive officer Hans-Christoph Hirt argued that the bank's board chairman Paul Achleitner shared part of the blame for the sluggish pace of corporate restructuring efforts at the financial institute. Hirt pointed out that the appointment of Sewing was already the "sixth change of CEO" during Achleitner's six-year term as board chairman.

Nevertheless, Achleitner defended the abrupt change of hands on Deutsche Bank's executive board on Thursday. "We needed to act, even if it was not our initial intention to make a replacement so quickly", the chairman told investors.

Achleitner added that "everyone" would have preferred for the CEO reshuffle to "occur without the public debate" which it sparked in the event. Deutsche Bank has filed criminal charges against an unknown individual for illicitly passing on information about the decision to sack Cryan prior to its official publication by the company.