Deutsche Bank has announced swingeing job cuts as part of a radical overhaul of its operations that will also see it spend €13bn on new technology over the next four years.
On Sunday, the bank's chief executive Christian Sewing revealed that it will be shedding 18,000 jobs, equivalent to one fifth of its global workforce, in its latest attempt to restart the bank.
The plan will see Deutsche effectively exit most of its investment banking activity to focus on corporate and private banking and asset management instead. The end of equity trading and a siginificant scaling back of its fixed income operations will affect staff in New York, London and Asia-Pacific where a number of teams were let go on Monday morning.
In addition the bank is also looking to spin off more than €70bn worth of badly performing loans into a separate 'bad bank' as it looks to reverse its ailing fortunes and tarnised reputation after a series of heavy regulatory fines over recent years.
Despite the job cuts, Deutsche is looking to increase its IT budget, In a letter to employees, Sewing wrote that the bank would be investing €13 billion in technology by 2022 as part of an effort to increase both innovation and efficiency.
He said that the bank intends to strengthen its private and corporate banking offerings "by offering innovative digital solutions and outstanding advice" adding that the bank's rebuilding will "only be successful if we fundamentally reshape our infrastructure" and "become more innovative and efficient whilst simultaneously strengthening our controls".
In addition to the €13 billion of spending, Deutsche will also be appointing a management board member responsible for digitalisaiton, data and innovation - previous SAP product development boss Bernd Leukert. "In the age of cloud computing and platform economies, he will ensure that we accelerate our progress still further," stated Sewing. "In doing so, we can build on the many innovations that our bank has developed over the past couple of years."
The bank hopes to save around €17bn in costs by 2022 but also expects to lost €7.4bn in lost profit and restructing costs as a result of the changes.
Although Deutsche has announced a number of IT overhauls in recent years, Sewing says the changes represent "the most fundamental transformation of the bank in decades". It also represents the most severe job cuts in decades and a trebling of the 6,000 job losses that came in 2018 following a failed attempt to merge with Commerzbank.
The announcement has at least been initially welcomed by financial markets with its share price up by 3% to €7.42 per share as of Monday morning. However, the fact that its share price was up around the €40 mark less than 10 years ago shows the problems that have beset the bank in the decade since the financial crisis.
In addition to its struggles in the equities and fixed income markets, Deutsche has also incurred heavy fines for misconduct, failed US stress tests and has most recently been served with subpoenas from US senators over its past dealings with Donald Trump.
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