Deutsche Bank To Cut 500 Jobs In Europe

Deutsche Bank To Cut 500 Jobs In Europe
By Deutsche Bank AG (GIF format logo) [Public domain], via Wikimedia Commons

Amidst Barclays PLC (NYSE:BCS) (LON:BARC) cutting 12,000 jobs, another major bank plans on cutting jobs in London. Deutsche Bank AG (NYSE:DB) (ETR:DBK) is planning to cut another 500 jobs in bond and currency trading units as well as the corporate finance division, the Financial Times is reporting.

Job cuts across European banks

Deutsche Bank AG (NYSE:DB) (ETR:DBK) had previously cut 1,500 investment banking jobs since 2012, saving the firm $7.48 billion (4.5 billion pounds), the report noted.  Numerous European banks reduced the size of key divisions last year, including UBS, Credit Suisse pulling back in its rates business, Deutsche Bank cutting its commodities arm and Barclays eliminating legacy rates and derivative businesses.  These reductions, however, come in the face of UBS building its hedge fund business, as reported in ValueWalk.

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Fixed income revenue off along with market rigging cases

The new cuts come as fixed income, historically a main profit driver for Deutsche Bank, has witnessed revenue drop in this key area, which the report cited as the reason for the rate cuts.  It should also be noted Deutsche Bank is involved in a criminal investigation of manipulation of the Libor interest rate market and many firms have been reducing trader head counts in these areas.

Cuts may not be done

Either revenue will need to increase or the cuts may not be over as the bank has targeted an income ratio of 65% by 2015.  The bank’s current income ratio is 76%, down from 81% last year.

JPMorgan analyst Kian Abouhossein wrote in an investor letter he expects Deutsche Bank AG (NYSE:DB) (ETR:DBK)’s fixed income, currencies and commodities revenues to be down 20 per cent in the first quarter, but to rebound to down only and 9 per cent in the full year.  The report noted that Stefan Krause, Deutsche Bank’s chief financial officer, had provided investors a warning on the bank’s slow start last week in Paris.

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Mark Melin is an alternative investment practitioner whose specialty is recognizing a trading program’s strategy and mapping it to a market environment and performance driver. He provides analysis of managed futures investment performance and commentary regarding related managed futures market environment. A portfolio and industry consultant, he was an adjunct instructor in managed futures at Northwestern University / Chicago and has written or edited three books, including High Performance Managed Futures (Wiley 2010) and The Chicago Board of Trade’s Handbook of Futures and Options (McGraw-Hill 2008). Mark was director of the managed futures division at Alaron Trading until they were acquired by Peregrine Financial Group in 2009, where he was a registered associated person (National Futures Association NFA ID#: 0348336). Mark has also worked as a Commodity Trading Advisor himself, trading a short volatility options portfolio across the yield curve, and was an independent consultant to various broker dealers and futures exchanges, including OneChicago, the single stock futures exchange, and the Chicago Board of Trade. He is also Editor, Opalesque Futures Intelligence and Editor, Opalesque Futures Strategies. - Contact: Mmelin(at)

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