Cost-cutting measures have been put in place at the global banking giant that could see 1 in every 6 jobs in the company axed over the next year – and quite possibly extending into 2020. The jobs will be cut from their equities trading and research division, and quite possibly from the derivatives trading division.
The cost-cutting drive has yet to be formally announced, but according to the Wall Street Journal, the German lender may use this period to eliminate between 15 thousand and 20 thousand jobs that it deems are superfluous to its operations. IT has joined a growing number of banks in taking this drastic measure and many others have already announced similar plans for the near future.
Shares rise following news of cost- cutting move
Shares of the German-founded global giant have reached a five-week high following the news, following a recent heavy slump that lasted right up until the CEO, Christian Sewing, announced the job reductions across the company. This has been a tough year for Deutschebank that has seen the company hit from multiple sides. There have been many money laundering allegations that have only been worsened by the extremely low-interest-rate environment that banks find themselves in these days.
The shares of the company have taken many hits due to those two factors alone, but fresh, record lows were hit with lawsuits from the sitting president of the United States coming thick and fast. Donald Trump’s aggressiveness towards Deutschebank was the final nail in the share price coffin and drastic measures were needed to raise the flagging price. Of course, the decision is as much about the current market as is shown by many other banks undertaking similar, if not exactly as drastic, measures.
Executive musical chairs at Deutschebank
The company has been shuffling its executives around in an attempt to clean house ahead of the coming job cuts. This comes amid failing merger talks with Commerzbank, and an insatiable desire from shareholders for the bank to pull out of businesses that are simply not making enough money to be seen as properly profitable.
A number of key executive positions have been freed up, most notably the head of foreign exchange in the EMEA (Europe, Middle East, and Africa) region. The redundancies that were announced by Deutschebank followed from the news that British banking behemoth HSBC would be doing the same thing.
HSBC, a British banking multinational giant, reported that they would be getting rid of hundreds of investment banking jobs due to the increasingly falling revenues in the division. One more thing that contributed to the losses was the impact that EU regulations are having on the sector. These regulations are squeezing profit margins, even though they are in general good for the consumer.
The British bank targetted approximately 500 jobs so that it would be able to safeguard its dividend and help shore up the stock price before it falls too much.