Staff at Deutsche Bank’s London and New York offices left today clutching white envelopes after being told to clear their desks, as the German firm cut 18,000 jobs.
Tearful workers were told to pack up their belongings just hours after the bank revealed a major worldwide restructuring.
Staff at Deutsche Bank’s London office who were told to clear their desks by 11am today are hitting the nearest pub and holding white envelopes that are reportedly redundancy notices.
Few staff wanted to speak outside the bank’s London office, but trade was picking up at the nearby Balls Brothers pub, with many of the employees thought to be making their way to the bar from the office.
One fund manager who was drinking bubbly inside the bar with his friends said they were not from Deutsche, adding:
‘We are celebrating that we are not at Deutsche.’
One Deutsche employee in London said today: ‘I was terminated this morning. There was a very quick meeting and that was it,’ said an IT worker leaving Deutsche Bank’s London office this morning.
‘I got laid off, where else would I go?’ said one equity sales staff member in London, who had headed to nearby pub.
The company will close its lossmaking equities trading business and cut some jobs to shrink its bond and rates trading operations.
A city worker outside Balls Brothers wine bar, Central London, with a white envelope containing what is believed to be a redundancy notice from Deutsche Bank. The bank has started a cull of 18,000 jobs
A number of people can be seen leaving 60 Wall Street Deutch Bank with white envelopes which are reported to be their redundancy notices
People exit Deutsche Bank’s Manhattan headquarters with some of their belongings following news that the global banking giant will be letting go of thousands of employees due to a major restructuring at the German bank
A man carries a box as leaves from the offices of German firm Deutsche Bank in London today
City workers hug outside Balls Brothers wine bar near Deutsche’s officers, where trade was picking up this afternoon amid the job cuts. It is unclear if those pictured were employees of the bank
A man leaves the Deutsche Bank building in Central London with some belongings today
Deutsche Bank, which was the first major finance firm to suggest it could leave the UK and move 4,000 jobs out of the country in the event of Brexit, refused to tell MailOnline how many staff in London would be axed.
Sources have estimated it could be well over 3,000 according to eFinancial News, while an IT contractor at the London office said this morning as news broke of the redundancies in London that 100 people had been made redundant from a single floor.
A wave of job cuts now looks set to hit Frankfurt, where recent changes in labour law making it easier to fire people earning €234,000 (£210k) could encourage the bank to cut senior staff.
Yesterday, the Frankfurt-headquartered bank said the mass layoffs would reduce its annual costs by £5.4billion.
The 91,500 worldwide employees are set to be cut by just over 20 per cent, to 74,000, in an unprecedented round of departures for Deutsche.
The firm sacked workers in Sydney, Hong Kong and across the Asia-Pacific region on Monday morning as it launched one of the biggest restructurings of its investment bank since the financial crash.
Meanwhile, an equities professional at the firm’s New York office told eFinancial News: ‘9.30am is when most people in my division have been asked to report to the auditorium to be fired.’
A City worker outside Balls Brothers wine bar holding a white envelope, while speaking to a colleague
As many were seen leaving the London office with bags, some employees were pictured receiving in a huge delivery of 30 large pizzas at lunchtime from a motorcyclist.
One employee told the Financial Times: ‘This is really sad what is going on right now in the bank, but I guess from top management’s point of view that is what is needed to be done.’
Staff in London were reportedly told just hours after Deutsche Bank announced the overhaul that they had until 11am to pack up their belongings.
One man, who was told his door pass would stop working in a few hours, told The Telegraph’s banking editor Lucy Burton: ‘I’m trying to get my head straight’.
Deutsche has insisted it will not fire its retail employees in Germany – where employment laws are far more rigid – against their will until mid-2021.
A staff member takes in pizza boxes at the London office of Deutsche Bank at lunchtime today
A staff member receives a pizza delivery as Deutsche Bank confirmed plans to cut 18,000 jobs
Why is Deutsche Bank struggling? How the latest turmoil comes after years of pain for the institution and its investors
By Simon Lambert for This Is Money
Deutsche Bank’s massive cuts revealed today are the culmination of many years of pain for the bank and its investors.
After riding the financial boom years from 1999 to 2007 – as it planned to become the Goldman Sachs of Europe – Deutsche Bank has largely suffered ever since the financial crisis hit.
The aftermath of the crisis saw much tougher rules brought in for banks, requiring them to hold more capital, rely less on debt and play things safer, leaving Deutsche struggling.
People hug outside the Balls Brothers bar, where some Deutsche Bank workers were heading this afternoon. It is unclear if the people pictured were employed by the bank
Deutsche had expanded dramatically after buying US institution Bankers Trust in 1999, growing its investment banking operation substantially and was for a short period in 2007 considered the world’s largest bank.
However, much of that expansion was debt-fuelled leaving Deutsche as also the world’s most leveraged bank.
Deutsche was not laid as low by bad bets during the financial crisis as many of its giant rivals, but it was hit hard as regulators reacted to the crunch by demanding that banks held more capital. Meanwhile, investors shied away from the lucrative but risky trades that had made global mega-banks so much money.
Deutsche Bank has had to repeatedly raise money from investors to meet capital requirements, with £30billion of equity raised over the past ten years, and its share price has sunk from almost €110 at its peak to about €7.
After the financial crisis, the bank scaled up its equity trading division in an attempt to make more money, but that has not paid off and now it will bear the brunt of the cuts.
Along the way there has been a €2.5billion Libor scandal fine – levied for rigging the key global interest rate – and a €7.2billion fine for mis-selling US mortgage backed securities.
Deutsche Bank shares lost more than half their value in 2018 and it has only made one annual profit in the last four years, in 2018.
A proposed merger with fellow German lender Commerzbank collapsed earlier this year and while the scale of today’s cuts comes as a surprise – with 18,000 jobs hacked from its 91,500-strong workforce – the arrival of a radical plan was not.
Restructuring costs of €3billion will push Deutsche Bank to a €2.8billion loss for the second quarter of 2019, while a bad bank with €74billion of legacy business held in it aims to distance the bank from the past.
Deutsche will ask to be allowed a temporarily lower level of core tier 1 capital – a key financial health measure – so that it can fund the €7.4bilion restructuring without calling on investors for more cash.
Boss Christian Sewing hopes this plan will call time on the era when Deutsche tried to crack Wall Street, investors will hope it means it finally starts making more money and increases profit margins, and regulators will hope it puts one of the world’s famous banks on a better financial footing.
Despite job losses in London, the bank confirmed it still intended to move into its HQ to the city’s Moorgate area once the current development was finished in 2023.
In London, the Guardian reported how 100 people had been made redundant on the fourth floor while some members of staff were seen leaving the office in tears.
Chief executive Christian Sewing, who makes £6million a year in his role, said the job cuts ‘have been the most difficult and painful part of our decision making’ as ‘people and their fates are very important to us’.
The cut backs from the bank – which paid billions in fines and settlements after the 2008 financial crash, when when Lehman Brothers failed – comes after concerns the UK economy is at a standstill.
Data firm Markit’s PMI tracks the private sector and reported shrinking business activity in June.
Chris Williamson, economist at IHS Markit, told The Financial Times: ‘The latest downturn differs from that seen in 2016 as it has followed a gradual weakening in the rate of economic growth rather than being a sudden and brief collapse in output after the ‘shock’ referendum result.’
People walk outside the London office of Deutsche Bank which has confirmed plans to cut jobs
Deutsche Bank said today that it would drop its stock sales and trading unit as part of a plan to exit more volatile investment banking activities.
It said it would cut roughly a quarter of its total cost base through steps such as dropping the investment bank’s stock-trading business.
It would also slim down its division focused on fixed-income investments.
The bank would not say where the cuts would fall, but many of its investment banking activities are carried out in Wall Street and London.
How Frankfurt could be next to suffer job cuts – but retail workers will be protected by tough German labour laws
Frankfurt looks to be next in the line for job cuts as Deutsche Bank announced it was scrapping its global equities business.
Staff at the German retail bank will be safe from being dismissed against their will until 2021 thanks to more rigid labour laws in the country.
But new laws made it easier to file people earning more than €234,000 (£210k) could leave senior staff at risk.
‘It’s the quiet before the storm,’ one Frankfurt managing director told efinancialcareers. ‘We’re expecting Asia, the U.S. and London to be first.’
It will also slim down its division focused on fixed-income investments. By doing that, the bank is to focus on areas with steadier earnings such as serving corporate customers.
The bank would also create a separate unit to dispose of investments that are less profitable or no longer fit its strategy.
The bank said it did not expect to have to raise additional capital from shareholders.
Mr Sewing said: ‘Today we have announced the most fundamental transformation of Deutsche Bank in decades.
‘We are tackling what is necessary to unleash our true potential: our business model, costs, capital and the management team.
‘We are building on our strengths. This is a restart for Deutsche Bank – for the long-term benefit of our clients, employees, investors and society.’
The move follows the failure of merger talks with German rival Commerzbank.
Deutsche Bank said the combination would not make business sense, but that left open the question of what strategy the bank could pursue to make its business leaner and more profitable.
For years, Deutsche Bank has struggled with regulatory penalties and fines, weak profits, high costs and a falling share price.
The bank went three straight years without turning an annual profit before recording positive earnings for 2018.
A man walks into a Deutsche Bank office in London, where staff were today told to clear their desks
CEO Christian Sewing took over last year and promised faster restructuring after predecessor John Cryan was perceived to have moved too slowly to restructure the bank.
The bank paid billions in fines and settlements related to behavior before and after the global financial crisis, including a $7.2 billion settlement in 2017 with the Justice Department over selling bonds based on mortgages to people with shaky credit.
But that hasn’t ended the negative headlines. Two congressional committees have subpoenaed Deutsche Bank documents as part their investigations into President Donald Trump and his company.
Deutsche Bank was one of the few banks willing to lend to Trump after a series of corporate bankruptcies and defaults starting in the early 1990s.
Trump had sued Deutsche Bank to stop the subpoenas, but a judge in May ruled against the president.
Deutsche Bank begins wielding the axe with 18,000 staff around the world due to discover today if they have lost their job
by Chris Pleasance
Deutsche Bank sacked workers in Sydney, Hong Kong and across the Asia-Pacific region on Monday morning as it launched one of the biggest restructurings of its investment bank since the financial crash.
It announced that 18,000 jobs will go worldwide as it mothballs its global equities business and cuts back on fixed income, which was regarded as one of its strengths.
While the bank gave no geographic breakdown of where the axe will fall, staff left the Sydney office on Monday morning saying that they had been laid off.
CEO Christian Sewing said that the bank aims to turn even or break a profit by 2020, and predicts 6billion euros ($6.7billion) in pretax profits by 2022.
People walk past a Deutsche Bank office in London this morning following news of job losses
Several workers left offices holding large envelopes with the bank’s logo.
Three employees took a picture of themselves beside a large Deutsche Bank logo outside and hugged each other before hailing a taxi.
‘If you have a job for me please let me know. But do not ask questions,’ said a man who confirmed he worked at Deutsche Bank but declined to comment further.
Despite the cuts starting in Australia and Asia, the majority are expected to come from offices in Europe and the US.
The restructuring plan will cost 7.4 billion euros ($8.3 billion) and undo years of work that had aimed to make Deutsche investment bank a major force on Wall Street.
Shares in Deutsche Bank were up 4.7 per cent in Frankfurt at 6.25am GMT as investors reacted positively to the news, according to brokerage Lang & Schwarz.
Deutsche Bank gave no geographic breakdown for the job cuts, though the bulk are widely expected to fall in Europe and the United States. The global working day on Monday began with cuts in Sydney, Hong Kong and elsewhere in the Asia-Pacific.
Bankers seen leaving Deutsche Bank’s Sydney office on Monday said they had been laid off, but declined to be identified as they were due to return later to sign redundancy packages.
CEO Christian Sewing said that the bank aims to turn even or break a profit by 2020, and predicts 6billion euros ($6.7billion) in pretax profits by 2022
One person with knowledge of the bank’s Australia operations said its four-strong equity capital markets (ECM) team was also being disbanded.
Entire teams in sales and trading were losing their jobs too, according to several Deutsche bankers.
Regionally, Deutsche used to rank among the top 10 banks in league tables for ECM deals, but it had slipped in recent years, hitting 17th last year and 18th in 2019, Refinitiv data showed.
So far this year, it ranks 8th regionally for mergers and acquisitions activity.
Deutsche had some 4,700 staff at its main regional offices in Sydney, Tokyo, Hong Kong and Singapore, factsheets on its website showed.
Its investment banking team for the Asia-Pacific region had about 300 people before the cuts, of which 10 to 15 per cent will be laid off, almost all in its ECM division, said a senior Asia banker with direct knowledge of the plans.
One laid off equities trader in Hong Kong said the mood was ‘pretty gloomy’ as people were called individually to meetings.
He said that, after chats with human resources managers, ‘they give you this packet and you are out of the building.’
A Deutsche Bank spokeswoman declined to comment on specific departures, saying the bank would be communicate directly with employees and would be ‘as responsible and sensitive as possible implementing these changes.’
Chief Executive Officer Christian Sewing said on Sunday that it was the most fundamental transformation of the bank in decades. ‘This is a restart,’ he said.
‘We are creating a bank that will be more profitable, leaner, more innovative and more resilient,’ he wrote to staff.
The bank will set up a so-called bad bank to wind-down unwanted assets, with 74 billion euros of risk-weighted assets.
Sewing will represent the investment bank on the board in a shift that illustrates the division’s waning influence.
The CEO had flagged the restructuring in May, promising shareholders ‘tough cutbacks’ to the investment bank. It followed Deutsche’s failure to agree a merger with rival Commerzbank AG.
‘The new investment bank will be smaller but more resilient, with a focus on our financing, capital markets, advisory services and sales and trading businesses,’ Asia-Pacific Chief Executive Werner Steinmueller said in a memo to staff on Monday that was seen by Reuters.
One senior banker, who still had his job, said the bank was not giving up on deals it was working on but questioned how well its slimmed down franchise could compete in future.
‘The biggest question for us is where do we go from here if we don’t offer the whole suite of products. Will clients stick with us or is the game over?’ he said.