Deutche Bank announces slash (jobs) and burn (shareholders)

Deutche Bank AG on Thursday announced plans to cut 35,000 jobs over the next two years as part of a sweeping overhaul under new co-Chief Executive John Cryan.

Deutche Bank launches a slash and burn to restore profits

Deutche Bank launches a slash and burn to restore profits

The lender’s so-called ‘Strategy 2020’ includes plans to cut the number of clients served by its investment banking and markets business by 50%. The reductions will be focused on “higher operating risk countries.” The bank said it would close certain investment-banking operations in Chile, Mexico, Denmark, Finland and other countries, and exit certain rates products and plans to wind down noncore operations by 2016.

As a result of the changes, the bank is forecasting cost savings of €3.8 billion ($4.15 billion), although restructuring and severance costs will total between €3 billion and €3.5 billion, mostly through 2016.

The overall head count reduction includes 9,000 full-time jobs, 6,000 external contractors and 20,000 additional roles through the disposal of assets.

Details of the broad reorganization came as the bank reported a €6 billion net loss for the third quarter, in line with its recent warning after writing down the value of key investment-banking and other assets amid a deep restructuring, citing tougher regulatory requirements.

Germany’s largest lender had announced more than €7 billion in asset impairments and other expenses earlier this month that it said would weigh on its results for the three months ending Sept. 30.

The bank said total revenue was €7.3 billion in the third quarter, down 7% from a year earlier. The decline was largely driven by asset impairments.

Disposals

The bank is planning to shed a range of key holdings including its Postbank division. Mr. Cryan and senior executives on Wednesday night laid out fresh companywide financial targets the bank has set as it tries to distance itself from a series of past financial and regulatory failings and grapple with stringent new regulatory demands.

No Dividend

Deutsche Bank said that as part of its efforts to conserve capital, it won’t pay dividends to shareholders in 2015 or 2016.

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