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FINANCE

Deutsche axes 15,000 jobs after huge loss

Deutsche Bank, Germany's biggest lender, said on Thursday it would cut 15,000 jobs and 200 German branches in the wake of the company's biggest-ever quarterly loss.

Deutsche axes 15,000 jobs after huge loss

Deutsche Bank said in a statement that it booked a net loss of €6.01 billion in the period from July to September compared with a loss of €94 million a year earlier, as a result of write-downs on its stake in Chinese group Hua Xia Bank and provisions set aside for litigation costs.

That was a bigger quarterly loss even than those the bank suffered at the height of the financial crisis in 2008.

News of the loss confirms a warning the bank issued on October 8th.

At the time, Deutsche Bank said it would set aside €1.2 billion to deal with potential fallout from the Libor rate-rigging scandal and suspected price-fixing in the precious metals market.

15,000 jobs set to go

New CEO John Cryan announced on Thursday the cost-cutting measures he plans to take, including severe job cuts and widespread branch closures, as he seeks to return Deutsche to profitability.

He will cut around 9,000 jobs inside the company, as well as a further 6,000 external contractor positions, as part of what the lender calls “Strategy 2020”, broadcaster ARD reports.

The cuts are set to continue in the coming years, with a further 20,000 people set to lose their jobs at the company over the next two years, a measure which will principally be achieved through cutting loose subsidiary Postbank.

Meanwhile 200 branches are marked for closure in Germany and the bank will pull completely out of ten countries, including Argentina, Chile, Mexico and Denmark.

The saving measures should reduce pre-tax costs by €3.8 billion per year. The costs of restructuring will come in at between €3 and €3.5 billion, the bank estimates.

Justification for the move was to create a “simpler and more efficient” structure, Cryan explained.

“This is never an easy task and we are not doing it without a sense of conscience,” he added.

US authorities are also probing Deutsche Bank over allegations that it helped Russian businessmen close to President Vladimir Putin circumvent sanctions.

The bank had already cancelled its dividends for 2015 and 2016 on Wednesday – the first time shareholders have not seen a return on their investment since the 1950s.

“The board expects that from business year 2017 a dividend will be paid out at a competitive level,” the bank said in a statement.

SEE ALSO: Deutsche Bank error hands client $6 billion

 

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BANKING

German online bank N26 shutters US service

German online bank N26 said Thursday it was closing its operation in the United States next year, as regulators in Europe place the "fintech" start-up under increased scrutiny.

The N26 logo on a bank card.
The N26 logo on a bank card. Photo: picture alliance/dpa | Christophe Gateau

N26’s 500,000 customers in the US would be able to use their services until January 11th, 2022, the bank said in a statement, after which it would cease to operate in a market it first entered in 2019.

Instead the Berlin-based operation would “sharpen its focus on its European business”, where it already operates in 24 countries and is exploring expansion into more eastern European markets.

N26 said it would also look to launch new “investment products in the coming year” to sit along side its current account service.

Founded in 2013, N26 offers free, online-only banking services to around seven million clients and is one of Germany’s most high-profile financial technology or “fintech” firms.

In October, the bank raised $900 million from private investors, and announced a plan to hire a further 1,000 employees to reinforce its product development, technology and cybersecurity teams.

READ ALSO: German online bank N26 to create 1,000 jobs

At home, N26 has been in the crosshairs of the German banking watchdog BaFin since 2018 after a local news media investigation found that it was possible to open account with forged IDs.

Earlier in the month, the regulator said it was upping its oversight operations at N26, appointing a special representative to monitor the bank’s progress towards solving issues in “risk management with regard to IT and outsourcing” identified by BaFin.

The regulator also limited the number of new customers N26 could take on to 50,000 a month until the shortcomings were addressed.

N26 was already being monitored by BaFin over failures in the start-up’s anti-money laundering system.

BaFin issued N26 with a 4.25-million-euro ($4.8-million) penalty earlier this year in connection with around 50 “suspicious transactions” the bank failed to report promptly enough.

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