Deutsche Bank plans to close most Asia-Pacific equity businesses.
Deutsche Bank shares on Monday as
it launched one of the biggest overtake of its investment bank since the
financial crisis by cutting 18,000 jobs around the world, starting the day with
cuts in Asia.
The lender announced the job
losses on Sunday as part of a restructuring plan that will cost 7.4 billion
euros ($8.3 billion) and see it undo years of work that had aimed to make its
investment bank. The bank will scrap its global equities business and cut some
operations in its fixed income; an area traditionally regarded as one of its
Shares in Deutsche Bank opened up
more than 3 per cent in Frankfurt to reach their highest value since May.
Deutsche Bank CEO Christian
Sewing, he had called the shake-up a restart for the bank, is due to speak to
the media initially and then address analysts later on Monday. Deutsche said
the restructuring would push the bank into a loss this year, meaning it will
have been in the red four out of the past five years. It was unclear when it
would return to profit.
JPMorgan called the plan
including about credibility of execution, revenue growth details and employee
Ratings agency Moody's said the
bank faced significant challenges to executing the plan swiftly and It’s a
risky man composer, it has the potential to bring the bank back on course, said
a person close to one of the top 10 biggest shareholders.
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. One
person with knowledge of the bank's Australia operations said its four-strong
equity capital markets (ECM) team was also being disbanded. But the person also
said most of its mergers and acquisitions (M&A) team was not immediately
affected. Entire teams in sales and trading were losing their jobs too,
according to several Deutsche bankers.
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, definitive data showed. So far
this year, it ranks 8th regionally for M&A activity.
Its investment banking team for
the Asia-Pacific region had about 300 people before the cuts, of which 10 per
cent 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 in to
meetings. They give you this packet and you are out of the building, he said.
Several workers left offices holding envelopes with the bank's logo.
A bank spokeswoman would not
comment on specific departures but said the bank would be communicate directly
with employees and would be as responsible and sensitive as possible
implementing these changes. This is a restart, Sewing said on Sunday,
describing the initiative as most fundamental transformation in decades. 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.