Deutsche Bank Is Laying Off 800 Employees
The largest bank in Germany produced solid earnings when banks in the United States and Switzerland were rescued. Customers withdrew deposits, investors panicked during the turmoil, and the volatility continued.
Deutsche is cutting its workforce following a recent buildup of staff. German Bank’s CEO Christian Sewing told reporters the bank needed to speed up even more. According to executives, the new jobs will be filled by experts across the bank rather than client-facing positions as part of several measures to reduce costs by 500 million euros.
In the first quarter, Deutsche employed 86,712. Despite a slump in investment bank revenues, Deutsche’s results were buoyed by higher interest rate income. The bank had its longest streak of profits after years of losses, marking its 11th consecutive quarter of profit. In the first quarter, shareholder profits were 1.158 billion euros ($1.28 billion).
Profits were better than analysts had expected, with the company posting a profit of around 977 million euros compared to 1.060 billion euros a year earlier. Sewing told employees in a memo that the stability resulted from hard work. Investor bank revenues dropped 19%, worse than expected, while corporate and retail revenues topped expectations.
Shares of Deutsche had risen 1.7% by midmorning. There had been a 15% drop in the shares in late March on fears of contagion from the banking troubles, scaring global markets and provoking German Chancellor Olaf Scholz to speak out.
The bank’s deposits declined by 5% in the first quarter, but executives said they had increased in April. Inflation and regulatory issues are among the things that threaten Deutsche, one of the world’s largest banks.
In a major overhaul of its management board, Deutsche will address changes at the top of its retail and U.S. operations, which are critical to the investment bank. Deutsch’s chairman says sustainable profitability is the goal of the reshuffle. Deutsche Bank sought to restore profitability in 2019 by diversifying its businesses away from its volatile investment bank towards companies and retail customers.
In the first quarter, the investment bank earned 2.7 billion euros, below expectations of 2.8 billion euros. Despite declines at rivals like JPMorgan and Goldman Sachs, revenue in Goldman Sachs’ origination and advisory business dropped 31%.
Among the bank’s largest divisions, fixed-income and currency trading lost 17% of its revenue to 2.4 billion euros. There was an expectation of 2.5 billion euros in revenue from analysts. While revenue at the investment bank decreased, gains at the corporate and retail banks increased by 35% and 10%, respectively.
Profit Gains And Challenges
German banks produced solid earnings at a time when banks in the United States and Switzerland had to be rescued. There has been a crisis that has caused investors to panic and depositors to withdraw funds.
As opposed to a recent staff buildup, the latest effort to reduce the bank’s workforce has been on the ground. Executives have described the move as part of several measures to cut costs by 500 million euros over the next few years, with most jobs cut being senior non-client-facing roles.
There were 86,712 employees at Deutsche at the end of the first quarter. Higher interest rates and an improvement in investments boosted the company’s performance. In the first quarter, we had 1.158 billion euros ($1.28 billion) in net profit.
This was a better result than analysts’ expectations of a profit decline to around 977 million euros, compared with 1.060 billion euros a year earlier. One of the world’s most systemically important banks is Deutsche Bank.
Analysts say a slowing economy, high inflation, and regulatory issues have plagued it over the years. The retail business and its U.S. operations, a critical hub, have undergone a major revamp of their management team. During 2019, the bank tried to reduce its dependence on volatile investment banks and shift these to more stable businesses.
Investment bank revenue fell 19% to 2.7 billion euros, below expectations of 2.8 billion euros. Corporate and retail bank revenues, which increased by 35% and 10%, countered this decline.
