Dive Brief:
- Deutsche Bank's supervisory board is expected to meet next Monday to look at staff cuts of as many as 20,000 people, as reported by Reuters and others. More than 9,000 staff in the U.S. could be let go as part of the overall restructuring.
- The bank's U.S. equities business could be among the hardest hit, having lost an estimated $750 million last year, according to a Bloomberg report.
- The potential staff cuts come amid recent news that Deutsche Bank's U.S. subsidiary had passed the Fed's annual stress test one year removed from failing the test, the Wall Street Journal reported.
Dive Insight:
July 7 will be a key day for Deutsche Bank. The supervisory board of Germany’s largest bank is scheduled to meet Monday, Reuters says, to decide whether to cut as many as 20,000 staff from its operations, including more than 9,000 in the United States, as it tries to reduce costs and shrink unprofitable businesses.
Under a restructuring plan that’s been under discussion since the spring, the bank would shut down most of its U.S. equities business, leaving in place only a small operation to keep a pipeline to the U.S. equities market for its biggest European customers. It could also scale back its rate trading operations.
The lion's share of the cuts are expected to be in investment banking. In addition to the hits to the U.S. equities business, equities trading and interest rate derivatives could face cuts, and the bank's global equities division could be halved, a Bloomberg report says.
Christian Sewing, the bank’s CEO, suggested earlier this year in a call to investors that a big shakeup is necessary to right the bank, which has seen its share price tumble and long-term credit rating downgraded by Fitch from BBB+ to BBB.
Already some key people at the bank’s U.S. equities business have left, according to eFinancialCareers, a U.K. publication that tracks banking employment news. Should Deutsche Bank make significant staff cuts as predicted, thousands of bankers will be in the market looking for work and will likely explore other U.S. banking institutions, a challenge during a tight labor market that has been sitting at 3.6% unemployment for the past two months.