Deutsche Bank has announced an unprecedented restructure that will see the German banking giant close a major part of its trading businesses leading to 20 per cent job cuts globally, said media reports.
Within hours of Deutsche Bank announcing its $8.3 billion ‘reinvention’ plan that involves scrapping its global equities unit and cutting some fixed-income operations, thousands of employees have been laid off.
Staff working in share trading in London, New York and Tokyo were told that their jobs were going.
In London, some staff stayed away from work after being told their passes would stop working at 11:00, reported BBC.
A spokesperson said the aim of the changes, which will shrink its investment banking business, was to make the bank "leaner and stronger".
The bank closed a major part of its trading businesses which first affected employees in Sydney and Hong Kong. These job cuts are happening across offices from Hong Kong to London, New York and even Bengaluru.
The layoffs were going beyond the major financial centres.
A Deutsche Bank employee in Bengaluru told Reuters that he and several colleagues were told first thing that their jobs were going.
“We were informed that our jobs have become redundant and handed over our letters and given approximately a month’s salary,” he said.
“The mood is pretty hopeless right now, especially (among) people who are single-earners or have big financial burdens such as loans to pay,” he added.
With an envelope in hand, many of its staff across the world left their desks for the last time on Monday.
Earlier this week, the German banking major had announced that it will cut 18,000 jobs globally out of its total 74,000 employees by 2022. This move comes as the bank aims to reduce adjusted costs by a quarter to $19 billion over the next few years.
Chief Executive Christian Sewing declined to give a regional breakdown of the planned cuts but said they wouldn't be concentrated on one region. Sewing said the investment bank would come out of the restructuring smaller but more stable.
While some are losing their jobs immediately, some staff will be kept for longer to help wind down operations. However, investors reportedly weren’t impressed with the bank’s overhaul plans with its shares falling 5.4% in Frankfurt on Monday.
Meanwhile Bloomberg reported that the initial optimism surrounding CEO Sewing’s sweeping revamp has quickly given way to doubts over whether the German lender can reach its profit goals in a competitive home market.
The bank has consistently disappointed shareholders in recent years, and after the overhaul will be focused on servicing companies’ routine financing needs while also withholding dividends for this year and next.
Now the investors are becoming increasingly skeptical that Sewing can pull off the biggest overhaul in Deutsche Bank AG’s recent history.
What many are certain about: it’s still not the time to own its shares. The stock, which already had the lowest price-to-book ratio of any big European bank, has plunged almost 10% this week and 15% from its Monday peak, it stated.
The vast restructuring -- which will see 18,000 job losses -- is forecast to cost 7.4 billion euros ($8.3 billion) and will shrink the bank’s capital buffers.