Deutsche Bank is on its way to the most significant restructuring in decades. The German bank announced on Sunday that it will exit the global equities sales and trading unit, cut down the investment banking arm and slash 18,000 jobs in order to try to improve profitability.
According to CNBC, Deutsche plans to cut 18,000 jobs and aim for around 74,000 employees by the year 2022. Such cut will reduce costs by around EUR 17 billion in the next couple of years. The entire restructuring plan is estimated to cost Deutsche EUR 7.4 billion by the end of 2022. The net losses expected are EUR 2.8 billion for Q2 2019, the actual results will be released on July 25th, 2019. Back in March of 2019, there were merger talks with Commerzbank, but those plans fell off.
Deutsche’s CEO, Christian Sewing, said:
Today we have announced the most fundamental transformation of Deutsche Bank in decades.
The German bank was once considered a rival to the biggest names in investment banking such as Goldman Sachs, JP Morgan Chase, etc. However, Deutsche began losing its top position somewhere in 2017, when the bank had to pay $7.2 billion in settlements with the U.S. Department of Justice for misleading investors in the mortgage-backed securities business in 2008. As reported by CNBC, later in 2017 Deutsche was accused of Russian money laundering and paid $630 million in fines. In addition, the bank also paid $2.5 billion in fines to both UK and US regulators for allegedly trying to manipulate a complex interest rate scheme.
There are no planned dividends to be distributed both in 2019 and 2020. Deutsche may also create a fourth division to be known as “corporate bank”.
Here is another comment by Mr. Sewing regarding the position of Deutsche:
We remain committed to our global network and will help companies to grow and provide private and institutional clients with the best solutions and advice for their respective needs – in Germany, Europe and around the globe.