FRANKFURT • Deutsche Bank, Germany's biggest lender, announced yesterday that it would shrink its workforce by about 26,000 people by 2018 and pull out of countries in a new €3.8 billion (S$5.9 billion) cost-cutting drive as co-chief executive officer John Cryan seeks to improve returns.
The company, which ran up record losses in the third quarter, will cut about 9,000 jobs on a net basis, almost 10 per cent of the workforce it expects to have at the end of the year.
Others will leave as part of assets that will be sold, the bank said.
It will close operations in 10 countries, including Mexico, Norway and New Zealand, and move trading operations from Brazil to global and regional hubs.
Mr Cryan said the strategic changes are aimed at "stabilising the bank and turning around its long-term performance".
Deutsche Bank does not have a strategy problem. We know exactly where we want to go. However, Deutsche Bank has faced a grave problem for many years in implementing this strategy. In the last two decades, many strategies and targets were announced, but rarely were they consequently realised.
CO-CHIEF EXECUTIVE OFFICER JOHN CRYAN, reacting to criticisms by investors
"Sadly, this also means closing some of our branches and country locations, and reducing some of our front office and infrastructure staff too. This is never an easy task, and we will not do so lightly.
"I promise that we will take great care in this process," he said in a statement.
Mr Cryan, who took over from Mr Anshu Jain in July, is under pressure to lower costs, boost capital buffers and reverse a share slump that has made Deutsche Bank the worst-valued stock among global lenders.
He is presenting his strategy for the firm after some investors criticised a plan his predecessor proposed in April.
"Deutsche Bank does not have a strategy problem," Mr Cryan told reporters in Frankfurt.
"We know exactly where we want to go. However, Deutsche Bank has faced a grave problem for many years in implementing this strategy. In the last two decades, many strategies and targets were announced, but rarely were they consequently realised."
Deutsche Bank shares fell as much as 2.3 per cent and were 1.9 per cent lower at €26.96 as of 9.33am in Frankfurt.
Within the investment bank, the firm will reduce the number of clients by about half, especially in "high-risk" countries.
The impact of the plan and other savings will be to cut gross costs by €3.8 billion. The bank is proposing to scrap dividend for two years as it targets a common equity Tier 1 ratio of at least 12.5 per cent from the end of 2018.
The lender posted a loss of €6 billion for the third quarter as stricter capital requirements reduced the value of its investment bank and the firm set aside more money for legal costs.
Equity trading revenue fell 19 per cent to €588 million, the company said. Trading income rose 7 per cent in the third quarter as Mr Cryan's clean-up of the bank's books led to the largest three- month loss in at least a decade.
Revenue from trading debt and currencies, the investment bank unit's biggest component, rose 20 per cent to €1.73 billion in the pe-riod through September.
The bank is also mired in a tangle of litigation cases and has been fined for involvement in rigging interest rates.
In the past month, Mr Cryan has reshuffled management and said he is reorganising the money management business as he prepares to cut back the securities unit.
BLOOMBERG, AGENCE FRANCE-PRESSE