Deutsche Bank Considers Up To 20,000 Job Cuts (#GotBitcoin?)
Job losses would likely take place over more than a year, with the pain and costs spread across regions and businesses. Deutsche Bank Considers Up To 20,000 Job Cuts (#GotBitcoin?)
Deutsche Bank AG is weighing whether to cut 15,000 to 20,000 jobs, or more than one in six full-time positions globally, according to a person familiar with high-level discussions about the latest attempts to turn around the struggling financial giant.
The cuts being contemplated by senior executives reflect an acceleration of Deutsche Bank’s downsizing and another major pullback from its global ambitions. If followed through, the reduction would represent 16% to 22% of Deutsche Bank’s workforce of 91,463 employees, as disclosed by the bank as of the end of March.
Such deep cuts, which are being debated internally, would likely take place over more than a year with the pain and costs spread across regions and businesses, people close to the bank said. They expect a heavy toll on the bank’s U.S. operations and the investment bank in general.
The internal discussions show Deutsche Bank’s dire straits, buffeted by dismal profit expectations and exasperated investors looking for a reason to believe in the shares. Besides challenges in its core business, the bank faces a wide-ranging probe by U.S. law enforcement into money laundering allegations. U.S. House committees have also demanded details of the bank’s lending relationship with President Trump and others close to his administration and businesses.
One positive nudge came Thursday when Deutsche Bank’s U.S. subsidiary passed Federal Reserve stress tests. Last year, it was the only bank subject to the tests to outright fail a leg of the exams, with regulators citing deficiencies in capital planning and risk controls.
Details of the staff reductions remained in flux in recent days as bank officials debated strategic options, projected costs and calculations such as regulatory capital needs, according to people briefed on discussions inside the bank.
A Deutsche Bank spokesman declined to comment on any specific plans. The bank is “working on measures to accelerate its transformation” and will “update all stakeholders if and when required,” he said.
The downsizing probably would include job attrition, the people said. Large-scale cuts would go deeper than voluntary departures, people close to the bank said. The expense of eliminating jobs depends in part on employment contracts, including those involving strong labor unions in Germany, and up-front severance payments.
Bank officials want to make decisive changes that show they take investor concerns seriously. But they would like to do so without raising fresh capital, which would dilute shareholders, some of the people said. Investors have endured several rounds of share issuance in recent years. The bank’s shares have rebounded slightly in recent weeks, but trade not far above record lows.
Deutsche Bank has told investors to expect details of an overhaul by the time second-quarter earnings are released on July 24. Bank executives are discussing moving sooner to address uncertainty inside the bank. Some employees in the bank’s equities department, anticipating cuts, have cleared personal belongings from their desks, and salespeople have curtailed client calls and meetings, according to people inside the bank.
Investors and analysts have been calling for Germany’s biggest bank to ax money-losing businesses and pull back from underperforming ones. Last month Chief Executive Officer Christian Sewing promised “tough cutbacks” in the investment bank, which generates about half the bank’s revenues but has suffered high costs and lost market share.
A flurry of departures of top executives from its investment bank has highlighted the risks of trying to shrink the bank without losing key clients.
The investment bank, which had about 38,000 full-time employees at the end of March, is expected to take a big hit in any downsizing.
The bank’s global equities operation, which has steadily lost clout to U.S. banks with stronger balance sheets, lost about €750 million in 2018, the Journal reported in March.
Internal data on staffing levels show the business has about 1,050 employees in sales and trading roles, including about 300 in the U.S. That doesn’t include hundreds of employees globally in support and research roles, some producing reports for equities-trading clients. The equities staffing level is already about 21% lower than from the start of 2018.
In 2015, under former Chief Executive John Cryan, the bank pledged 15,000 job reductions that never fully materialized.
In May 2018, Mr. Sewing said the bank’s full-time workforce would fall “well below” 90,000 by the end of 2019. The bank cut about 5,800 full-time positions last year, disclosures show.
Trumponomics Delivers More Than 200,000 In US Bank Job Losses!!
Advancements in technology will lead the banking industry to see a massive reduction in headcount over the next decade, with a projected 200,000 jobs cut, according to Wells Fargo estimates cited by Bloomberg. Wells Fargo’s 225-page report outlines how technology could impact the US banking industry, including how AI could reduce mortgage processing costs by 10% to 20%, while the use of big data and cloud computing could yield significant savings.
Wells Fargo isn’t the first to predict that tech advancements in banking will have a major impact on banking employees’ trajectory. McKinsey predicted earlier this year that the headcount of front-office workers will drop by almost a third with the rise of robots.
Meanwhile, R. Martin Chavez, former Global Co-Head of the Securities Division of Goldman Sachs, says that all traders will soon need coding skills to succeed on Wall Street.
And while it may not be related directly to tech improvements, several major banks have already initiated cuts: Wells Fargo recently announced 400 job cuts to its customer service center following 120 layoffs earlier in the year, following an announcement from last year that it would reduce its overall headcount by up to 26,000 workers. Similarly, Citigroup CEO Mike Corbat said “tens of thousands” of call center workers could be replaced by machines that “radically change or improve customers’ experience while cutting costs.”
Higher tech investments in conjunction with large scale headcount cuts could allow banks to boost efficiencies while keeping costs low in the long term:
This magnitude of job cuts would represent more than 10% of total bank jobs, per Mike Mayo, a senior analyst at Wells Fargo Securities. Back office, branch, call center, and corporate employees are being cut by about a fifth to a third, whereas jobs in tech, sales, advising, and consulting are less affected. Mayo also points out that it can usher in the “golden age of banking efficiency.”
The banking industry spends $150 billion annually on tech — higher than any other industry in the US — which should ultimately lead to lower personnel costs. Major banks’ tech budgets are at a high: JPMorgan Chase, Bank of America, and Wells Fargo had tech budgets of $11.5 billion, $10 billion, and $9 billion, respectively — allowing them to roll out advanced digital features that help attract customers while cutting personnel costs.
Layoffs pertaining to customer service jobs, in particular, can make room for technology-enabled functions like interactive voice response (IVR) systems or chatbots. Chatbots — like Bank of America’s “Erica” — have largely begun taking the place of call center functions.
And alongside its recently announced job cuts, Wells Fargo may be working to make chatbot solutions even more sophisticated: It was recently searching for a natural language processing (NLP) chatbot team manager who will “manage the AI/NLP model development for Chatbot/Virtual Assistance areas.” Reducing headcount in customer service segments could ultimately boost efficiency and lead to cost synergies for banks while allowing them to dedicate funds to creating new solutions.
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Deutsche Bank Considers Up