Deutsche Bank mulling major job cuts
Published on: 02 Sep 2011 15:47 CET
Although investment banking brings in a healthy chunk of the bank’s income, the sector is also increasingly volatile. It has for months been suffering from the consequences of financial crises in Europe and the US, which have made investors extremely risk averse.
According to a report in the Financial Times Deutschland (FTD), no plans have been finalized, but bank managers are increasingly concerned over the fragile state of markets. They worry that August's economic gloom could extend far into the future and are considering cost cuts of between €1 and €2 billion, the newspaper reported.
“If revenue from securities and foreign exchange trading decline, there are hardly any IPOs in the pipeline and the economy wobbles, the situation is different,” an unnamed source said.
Deutsche Bank quickly denied the report. Two unidentified people cited by Bloomberg News as “insiders” said that no new cost-cutting programmes are being discussed. A spokesman added that there were already savings plans in place.
But managers may be worried because the pending change in the bank’s top leadership is creating uncertainty over what direction the bank should take. Plus, experts disagree over where the German economy is headed, the FTD said.
According to the newspaper, the German economy barely grew in the year’s second quarter, and economists variously predict an economic upswing or another dip into a recession.
This last scenario could force the bank to act quickly to supplement the saving programmes it has already put in place, the FTD said. It is working on integrating its operations with Postbank and is shifting some operations overseas in order to cut costs.
So far, Deutsche Bank has largely avoided the job cuts made by many of its competitors.