Deutsche axes 15,000 jobs after huge loss

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 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.

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