FRANKFURT, Germany -- Germany's struggling Deutsche Bank said Sunday that it would cut 18,000 jobs by 2022, downsizing its volatile investment banking division.
The Frankfurt-headquartered bank said it would cut roughly a quarter of its total annual costs, from $25.6 billion last year to about $19 billion, through steps such as dropping the investment bank's stock-trading business. The goals for the restructuring are to restore consistent profitability and better returns to shareholders.
The bank also plans to slim the division focused on fixed-income investments.
The aim is to focus on areas where the bank is among market leaders and on businesses with steadier earnings such as serving corporate customers.
For years, Deutsche Bank has struggled with regulatory penalties and fines, weak profits, high costs and a falling share price. The bank went three straight years without turning an annual profit before recording positive earnings of $382 million for 2018. Chief Executive Officer Christian Sewing took over last year and promised faster restructuring after predecessor John Cryan was perceived to have moved too slowly.
Deutsche Bank shares rose 2.5% on Friday to about $8 as markets anticipated a restructuring announcement. That is far below levels from mid-2015 when the shares traded over $33 per share.
The bank said one-time charges from the changes would mean a net loss of $3.14 billion in the second quarter. Excluding the charges, net profit would have been about $134 million.
The restructuring follows the failure in April of merger talks with German rival Commerzbank. Deutsche Bank said the combination would not make business sense, but that left open the question of what strategy the bank could pursue to make its business leaner and more profitable.
As part of the restructuring the bank said it would create a separate unit to dispose of billions in investments that are less profitable or no longer fit its strategy. The bank said it did not expect to have to raise additional capital from shareholders.
When complete, the job cuts are to reduce the workforce to 74,000. The bank would not say where the cuts would fall; many of its investment banking activities are carried out in New York and London.
A Section on 07/08/2019