Thread regarding Deutsche Bank layoffs

Deutsche Bank Cuts 18,000 Jobs

London(CNN Business) Deutsche Bank will cut 18,000 jobs and dramatically shrink its investment bank as part of a costly overhaul that marks a retreat from Wall Street after two decades of intense competition with American rivals.

The German bank said Sunday that it would shutter its equities sales and trading business, while creating a "bad bank" for €74 billion ($83 billion) in assets that eat up too much capital. The assets will be sold over the coming years.

"Today we have announced the most fundamental transformation of Deutsche Bank in decades," CEO Christian Sewing said in a statement, calling the moves a "restart."

It's a dramatic shift for the 149-year-old bank, a pillar of European finance that has struggled to produce consistent profits despite undergoing a series of overhauls.

Deutsche Bank (DB) said the job reductions would be made by 2022, bringing its headcount down to roughly 74,000 employees.

End of an era

Germany's biggest bank at one point dreamed of dominating investment banking, competing with the likes of Goldman Sachs (GS) and Morgan Stanley (MS) in Europe and abroad. It stated its global ambitions in 1999 with the purchase of Bankers Trust, an American investment bank.

Wall Street is k--ling the European investment bank

Wall Street is k--ling the European investment bank

But the bank — and its investment banking team in particular — struggled to find direction following the global financial crisis.

A sluggish European economy and a reluctance to reform made it harder for Deutsche Bank to compete in the expensive sector.

The division continued to s--- up resources even as it fell further behind competitors. The resignation last week of the head of the investment bank, Garth Ritchie, signaled that major changes were coming.

The reforms announced Sunday will let Deutsche Bank take a step back from investment banking and prioritize more reliable lines of business such as corporate money management. But the restructuring effort won't come cheap.

The bank said that costs related to the overhaul would push it to a net loss of €2.8 billion ($3.1 billion) for the second quarter. The total cost of the restructuring will hit €7.4 billion ($8.3 billion) by 2022.

Growing pressure

Pressure for Sewing to outline a path forward increased following the collapse of merger talks with crosstown rival Commerzbank (CRZBF) and a dismal first quarter earnings report.

In the first three months of the year, profit rose 67%, but that was due entirely to yet another round of belt-tightening. Revenue fell 9%, and the company said it would be "essentially flat" for the year.

Investment banking revenue fell 13% to €3.3 billion ($3.7 billion), while costs for the unit totaled €3.4 billion ($3.8 billion).

Shares in the bank are down almost 25% in the past year and hit a record low in June.

For weeks, Deutsche Bank had telegraphed that a turnaround plan was coming soon. But analysts weren't sure how far Sewing would go.

The bank has slashed thousands of jobs since he took over in April 2018, but this will be the biggest round of layoffs under his leadership.

Deutsche Bank did not provide a geographic breakdown of the cuts, but many are expected to hit US employees. The bank employs almost 9,300 people in North America, with most of those jobs in the United States.

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Take the money saved and create a decent internal blockchain R&D group.

That may give you a shot.

Other than that, watch the empire melt down.

Alternatively, you may turn back to mercantilism and lobby with the native government for protections

Post ID: @1sbz+ZVJXWcs

The demise of Deutschland AG: why Germany's once untouchable giants are gripped in scandal and crisis

by Lucy Burton, the Daily Telegraph

With VW, Deutsche Bank and Lufthansa in crisis, what has gone wrong with Germany Inc?

In the home of schadenfreude, misery loves companies. Germany’s once seemingly untouchable national champions – from VW and Deutsche Bank to Bayer and Wirecard – have been gripped by scandal and crisis. Business rivals are asking each other how much worse it can get for Deutschland AG.

“This is not what ‘Made in Germany’ stands for,’” says one senior German business executive. “There is a sense of embarrassment that some of the country’s few global champions seemed to act ruthlessly, bending the law and incurring legal fines for misbehaviour.”

It has certainly been a rough period Europe’s powerhouse. Frankfurt-based Deutsche Bank, once a symbol of German economic might, is now Europe’s most troubled big bank despite repeated efforts to revive fortunes and move on from past misconduct.

Described by analysts as “the Punch and Judy clown that keeps getting up again,” it is currently under scrutiny over its links with Donald Trump, is expected to unveil sweeping cuts next month and faces a US investigation for possible money-laundering lapses.

It is not facing challenges alone. Wolfsburg-based car maker Volkswagen is trying to move on from its 2015 diesel emissions scandal but, alongside its German rivals BMW and Mercedes-Benz owner Daimler, it could be hit with further fines by EU regulators over claims they colluded to block the development of clean air technology.

Then there’s Bavaria-based payments giant Wirecard, which has this year been hit with claims of fraud and accounting irregularities (the company has denied the allegations). And Leverkusen-based Bayer, the German chemical behemoth which acquired Monsanto for $63bn (£49.5bn) last year and now faces thousands of lawsuits over claims that Monsanto’s weed k--ler Roundup causes cancer.

Bayer, which has seen its shares plunge since the deal, was the “poster child for consistent value creation by German corporates” and the volatility caused by the legal drama has rocked investors, says Berenberg analyst Sebastian Bray.

But it is not just scandal-hit firms that are being dragged down. Last month Thyssenkrupp, the German lift company, said it would slash 6,000 jobs after abandoning plans for a merger with Tata Steel. Last week Cologne-based Lufthansa, Europe’s biggest airline, and Munich-based chipmaker Siltronic both issued profit warnings, the former squeezed by competition from low-cost rivals and rising fuel costs, and the latter hit by the US crackdown on exports to China, Germany’s major export destination.

“The issue for German companies is the over-reliance on exports which is great when global trade works [but] nowadays trade is questioned, the currency doesn’t offer incremental benefits and technological trends move away from German core skills,” says Arndt Ellinghorst, an analyst at Evercore who used to work for Volkswagen. “This drives the need for transformation away from machinery and engineering into software and digital. German labour and education can manage that change but it will take time and likely involve a recession.”

Others argue that the problem with these companies goes much deeper and reflect a wider problem with business culture in Germany. Michael Huenseler, a fund manager at Assenagon Asset Management in Munich, says the fact that firms in multiple sectors have faced issues shows that “corporate governance has been part of the problem” and the “power of the CEO” is where the difficulty lies.

One London-based restructuring boss, who asked not to be named, says his company avoids doing work in Germany because there has traditionally been a hierarchical structure where people don’t tend to question management and investors keep quiet.

“In many classic companies in Germany, hierarchies are very pronounced and the management approaches are often power-oriented. Unfortunately, the management style is often too top-down,” agrees Michael Wolff, a professor at the University of Gottingen.

“Traditionally, institutional investors have [also] played a subordinate role in assessing the corporate governance structures of German companies. Hardly any pressure was exerted on poorly performing companies and their supervisory boards. Due to the growing importance of institutional investors and their demand for professionalisation of supervisory board work, more systematic pressure is now being exerted.”

Recent shareholder meetings show that investors are finally starting to put their foot down. The 9,000 Frankfurter sausages, 9,000 pretzels and 13,000 slices of cake Deutsche Bank ordered for its nine-hour shareholder meeting last month failed to appease investors, with one shouting “we are faced with a pile of ----” and “if Pope Benedict XVI can resign, why not [Deutsche chairman] Paul Achleitner?”.

BMW also faced criticism at its recent shareholder meeting, while last week Wirecard was criticised for being “managed like a start-up”. In April, investors delivered Bayer chief executive Werner Baumann and his team an unprecedented vote of no confidence during a marathon, 12-hour meeting.

“The acquisition of Monsanto was carried out without asking the shareholders. As a result, the majority of investors at the last [AGM] voted against the relief of the management board. This is unique in German economic history,” says Wolff. “The loss of reputation is enormous and the pressure on the board has increased significantly.”

Sacha Sadan, who is in charge of corporate governance at Britain’s Legal & General Investment Management (LGIM), says he expects scrutiny to grow on German companies in future. LGIM, for example, opposed 36 German companies in 2018 compared to just 19 the year before.

Germany’s listed businesses are feeling the pressure as foreign investors such as LGIM, which manages around £1 trillion worth of assets, make their demands known.

The advisory arm of London-based Hermes Investment Management last year called on Deutsche Borse chairman Joachim Faber not to serve his full three-year term, to 2021, months after the German exchange giant faced allegations of insider trading. Faber is stepping down next year.

Meanwhile, in an eight-page letter published earlier this year, Sadan called on German corporates to hire an “independent counter-power” onto their board and to increase diversity at the top. He also warned that the common practice in Germany of asking a former member of the management board to be chairman of the supervisory board – the country operates a two-tier board structure – creates “an inherent conflict” of interest.

“You’re seeing an ever-increasing importance of foreign institutional investors in the German market which means that for the first time there’s a more fundamental reflection of where governance should go,” says Joerg Rocholl, president of the European School of Management and Technology in Berlin. “It was unheard of in the past that there could be no approval of the advisory board [in Germany] – this is definitely something that is completely new. I would expect this trend to continue and for investors to take a more active stance than they have done in the past. It will certainly have an impact on management.”

Some think now is a good time to invest in German businesses. Frédéric Guignard, a fund manager at Aviva Investors which has holdings in German software group SAP and medical conglomerate Fresenius, says there are plenty of opportunities as companies are currently undervalued. “Germany’s economy has historically been more reliant on exports than other European countries, and the country is highly exposed to the automotive, chemicals and industrials sectors. These sectors are currently suffering from the ongoing trade war between the US and China. We think this situation is creating opportunities for patient, long term investors,” he adds.

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