The financial district with the headquarters of Germany's largest business bank, Deutsche Bank, is photographed on early evening in Frankfurt, Germany, January 29, 2019. Deutsche Bank's supervisory board finalized the restructuring plan Sunday.
Germany's struggling Deutsche Bank says it will cut 18,000 jobs by 2022 in a sweeping restructuring it's calling a "radical transformation" aimed at restoring consistent profitability and improving returns to its shareholders.
Beyond the expected cutbacks to equities, Deutsche said it would also axe some of its fixed income operations, an area traditionally regarded as one of the bank's strengths.
Deutsche Bank officials had previously denied reports they had planned further USA restructuring measures. In order to settle balance sheet items amounting to 74 billion euros from these business units, the bank will create an internal "bad bank".
The rumors were confirmed by the bank, who said it would completely abandon all operations related to the buying and selling of shares. "This is a restart", he said.
It will also report a second quarter loss of €2.8bn to partly pay for the shake-up, which will significantly shrink its investment banking business.
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The reorganization announcement comes after the failed merger negotiations with its national rival, Commerzbank, BBC notes. The departure of investment bank head Garth Ritchie was announced on Friday. Here's what we know about what's going on at the German bank.
The job cuts would reduce the workforce to 74,000.
CEO Christian Sewing took over previous year and promised faster restructuring after predecessor John Cryan was perceived to have moved too slowly.
Deutsche Bank has taken multiple blows to its reputation over the past year, The Guardian report noted. The new division, to be lead by current transaction bank head Stefan Hoops, will be at the heart of the lender's future business model.
Big cuts to its investment bank could make it harder for the bank to fulfill this role and would mark a reversal of a decades-long expansion that began with its purchase of Morgan Grenfell in London in 1989 and continued a decade later by a takeover of Bankers Trust in the United States. Revenue fell 9%, and the company said it would be "essentially flat" for the year. Its shares fell to a record low last month. That would mark a fourth consecutive year of decline, down more than 30 percent from 2015.
Instead, Sewing is tapping into the bank's capital cushion to fund what he's billed as the bank's biggest restructuring in decades - which means he needs to be strategic with the little financial resources he can generate.