Deutsche Bank To Cut 500 Jobs In Europe

Updated on

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.

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.

Leave a Comment