Deutsche Bank AG (USA) (NYSE:DB) has announced plans to slash about 1900 jobs as a part of its cost saving measure. The bank is planning to reduce headcount mainly from corporate banking and securities, mostly from outside Germany. Deutsche Bank expects to save about 3 billion euro’s ($3.67 billion) from this strategy, which comes as a response to slowdown in financial market activity.
The recent announcements are in complete contrast to the statements given by the German Bank in April, when it said that it saw no need for layoffs at its investment bank. The German Bank is also reviewing its compensation practices to strike a balance between rewards for shareholders and those for employees.
Germany’s largest bank reported a 46 percent fall in its second quarter earnings. Its net profit fell to €661 million from €1.233 billion for the same period last year. Investment banking division experienced a fall in income, as fewer clients approached the bank for its services. One of the most affected services, due to crisis, trading debt securities, also reported fall in revenues. Total revenues declined 6 percent to €8.0 billion. The worst performer was the corporate banking and securities division, which includes underwriting and debt trading, which reported drastic falls in revenue by €451 million to €3.5 billion. The earnings were presented under the new co-CEOs Anshu Jain and Juergen Fitschen, who took over from Josef Ackermann in May. The earnings statement read “The European sovereign debt crisis continues to weigh on investor confidence and client activity across the bank.” Earlier this week a competitor, UBS (NYSE:UBS) reported its quarterly net profit halved to 425 million Swiss francs, mainly due to lower trading revenue and a drop in commissions and fees from clients.
The German Banks exposure to troubled euro zone countries Greece, Portugal, Spain, Italy, and Ireland was stable at 3.9 billion euro’s. Deutsche Bank reduced its exposure Spanish sovereign bond holdings by 36 percent, but increased its holding of Italian bonds by 29 percent.
After the announcement regarding job cuts, shares were up 2.3 percent at 25.42 euro’s by 12.10 GMT, making them one of the highest gainers on the STOXX Europe 600 Banks .SX7P index, which was down 0.8 percent.
