Deutsche Bank AG is implementing a companywide hiring freeze as Chief Executive Officer John Cryan seeks to lower costs and shore up investor confidence, according to a person familiar with the bank’s plans.
John Cryan, is struggling to reverse a slide in shares that eroded almost half of the company’s market value this year, amid concerns about mounting legal costs after the U.S. Department of Justice requested $14 billion to settle a probe into faulty securities. Since taking over in 2015, Cryan has suspended dividends, scrapped bonus awards for top management and cut risky assets while eliminating some 9,000 jobs.
Germany’s largest bank shares fell 2.5% to 12.04 euros at 1 p.m. in Frankfurt. They have dropped about 47% this year, making them the fourth-worst performer in the 38-member Bloomberg Europe Banks and Financial Services Index, which slipped 23%.
A spokesman for Deutsche Bank declined to comment on the hiring freeze, referring to an announcement on October 6, when the bank said it has reached an agreement with labor representatives to cut 1,000 positions in Germany as part of the wider restructuring plan. The lender employed more than 101,000 people in June, up from 98,138 at the end of 2014.
Analysts at JPMorgan Chase & Co. have estimated that Deutsche Bank could save as much as 1.9 billion euros ($2.1 billion) this year largely through a hiring freeze. Asked whether the lender will scrap bonuses for the executive board for a second year, Cryan told Germany’s Bild newspaper last month that “nobody has unrealistic expectations.”
The CEO has already said Deutsche Bank may fail to be profitable this year after posting the first annual loss since 2008 last year. He also signaled that the lender may have to deepen cost cuts.
Deutsche Bank is scheduled to release third-quarter earnings on October 27, 2016.