Deutsche Bank 'close to deal' on 1,000 job cuts at home

A slide in Deutsche Bank shares has eroded almost half of the lender's market value this year.
A slide in Deutsche Bank shares has eroded almost half of the lender's market value this year.PHOTO: BLOOMBERG

FRANKFURT • Deutsche Bank is poised to reach an agreement with labour representatives this week that will pave the way for the German lender to eliminate about 1,000 jobs in its home market as part of chief executive officer John Cryan's cost cuts announced last year, said people with knowledge of the matter.

The job cuts, which need to be signed off by the bank's works council, will mostly affect back-office staff such as in information technology services, said the people, who asked not to be identified.

The lender in June struck a deal with its works council to eliminate about 3,000 full-time positions, including 2,500 jobs at its private and commercial clients business.

Mr Cryan, 55, has been seeking to reassure investors that he is able to boost profitability as concerns over rising legal costs prompted some clients to pull funds and investors queried the bank's financial health.

As part of his overhaul announced in October last year, the CEO plans to eliminate 9,000 jobs, or about 9 per cent of the global workforce, including some 4,000 positions in Germany. A bank representative declined to comment.

Mr Cryan has struggled to reverse a slide in share prices that eroded almost half of the company's market value this year. Deutsche Bank shares touched a record low last month after the US Department of Justice requested US$14 billion (S$19 billion) to settle a probe into the sale of residential mortgage-backed securities, more than twice what the lender has set aside for litigation.

The CEO has told Germany's Bild newspaper that he does not plan to raise capital and ruled out government assistance. The stock rebounded last Friday after Agence France-Presse said the lender was nearing a settlement of US$5.4 billion with the US authorities.

Adding to the lender's legal woes, six current and former managers have been charged in Milan for colluding to falsify the accounts of the Italian lender Banca Monte dei Paschi di Siena.

While a potential US$5.4 billion settlement with the US Justice Department would leave Deutsche's key capital ratio "comfortably" above regulatory minimums, the lender may also face a penalty of up to €2 billion (S$3 billion) from a money-laundering probe tied to its Russian operations, analysts at Barclays with an equal-weight rating on the shares wrote in a note.

Mr Cryan and other top German executives are scheduled to travel to Washington this week as business leaders and central bankers gather for the International Monetary Fund and World Bank meetings, according to the people. The managers may use the trip to continue negotiations with the Justice Department to settle the investigation, they said.

BLOOMBERG

A version of this article appeared in the print edition of The Straits Times on October 04, 2016, with the headline 'Deutsche Bank 'close to deal' on 1,000 job cuts at home'. Print Edition | Subscribe