The layoffs come as the German institution faces challenges on many fronts.
Deutsche Bank will be cutting “another 1,000 jobs” after reaching an agreement with its group and general works councils “on role reductions in Germany,” and as part of its Strategy 2020, which calls for the elimination of 9,000 people from its work force.
News of the additional layoffs has gotten little attention as major media outlets have focused upon the negotiations between Deutsche Bank and the U.S. Department of Justice (DOJ) in an effort to resolve civil claims related to the German bank’s issuance and underwriting of residential mortgage-backed securities (RMBSes) and related securitization activities between 2005 and 2007.
The new job cuts follow the bank and council representatives signing off on “all remaining balance of interests agreements planned for 2016,” bank officials say.
“After announcing the agreements on the reduction of 3,000 jobs roles in June 2016, another 1,000 jobs will now be reduced,” according to a press release issued by the bank. “This brings the total number of role reductions in Germany to around 4,000. These are part of 9,000 jobs being reduced worldwide to make the Group more competitive as part of Strategy 2020.”
Implementing this latest round of layoffs is part of “our strategy to make the bank more efficient,” says Karl von Rohr, member of Deutsche Bank’s management board with responsibility for the firm’s labor relations in Germany, in a statement. “We are fully aware that today’s decision is a difficult change with significant personal impact for many employees. We will ensure that any staff reductions are carried out in a socially responsible manner,” von Rohr says.
Bank officials add that the first round of “negotiated agreements in June” were mainly from the private and commercial banking business in Germany, and are being implemented.
The negotiations for the second and third rounds “covered around 450 jobs” in the bank’s Chief Operating Office, an infrastructure function, according to the bank.
The other job cuts will come from the human resources department, Communications & Corporate Social Responsibility, Deutsche Asset Management, Global Markets and Corporate Finance and DB Research, the macroeconomic research unit, bank officials say.
“The staff reductions will be carried out in a timely, transparent and responsible manner for every impacted employee,” according to the bank’s release. Germany’s largest bank “whenever possible” will try to offer affected employees vacant positions within the group. “Furthermore, the bank will also assist affected employees in finding new jobs outside of the company where necessary.”
While the layoffs get underway, Deutsche Bank and the (DOJ) have to come to an agreement over the RMBS charges.
Initially, The Wall Street Journal broke the story last month that delineated the settlement talks between the bank and the DOJ, including the potential penalty of $14 billion to be paid by Deutsche Bank. Bank officials quickly denied that the penalty would be that high.
The controversy has raised concerns that the bank would have to consider a “bail-in” of imposing losses on shareholders and creditors rather than getting a bail-out from the German government to pay the DOJ fine and shore up its . As a result, the bank’s share price has been on a rollercoaster ride.
The high stakes DOJ battle follows other run-ins with U.S. regulators and in the U.K. concerns from the Financial Conduct Authority (FCA) over the bank’s alleged lapses in effectively applying Know Your Customer (KYC) filtering.
In addition to struggles with regulators, the German institution has fallen behind competitors in the investment banking business, a setback that is further upsetting its investors.
Bank officials counter that their restructuring efforts will turn around the bank’s current situation.
Deutsche Bank has commercial and investment banking offerings, and provides retail banking, transaction banking and asset and wealth management products and services.
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