Deutsche Bank AG (DBK), Europe’s biggest bank by assets, is considering cutting about 1,000 positions at its investment bank as revenue declines, according to a person with knowledge of the matter.
The cuts will be mostly outside Germany, where the firm’s investment banking operations are focused, said the person, who asked not be identified as Deutsche Bank’s plan hasn’t been made public. Armin Niedermeier, a spokesman for the Frankfurt-based bank, declined to comment on potential job losses.
Europe’s sovereign debt crisis has crimped investment bank revenue as market uncertainty deters client trading. Deutsche Bank has trailed competitors in reducing staff because the firm has better control of costs and doesn’t want to lose market share, said Dirk Becker, an analyst with Kepler Capital Markets.
“The investment bank depends on the economy and if markets plunge, then it is clear they will have to reduce personnel,” said Becker, who recommends investors buy the stock. “Reducing capacity less than their competitors means they will be better positioned to respond to an improvement.”
Western European financial firms have announced fewer than 20,000 job cuts this year, compared with more than 107,000 in 2011, data compiled by Bloomberg show.
Deutsche Bank announced 500 job cuts in October after scrapping its operating pretax profit forecast of 10 billion euros ($12.3 billion) for 2011 amid a “significant and unabated slowdown in client activity.” That reduction has been “materially completed,” Chief Financial Officer Stefan Krause said on an April 26 conference call with analysts.
Credit Suisse Group AG (CSGN) announced plans last year to cut 3,500 jobs and lower expenses by 2 billion francs. Switzerland’s second-biggest bank said yesterday that it was planning to cut an additional 1 billion francs of costs by the end of 2013, without providing details of job losses.
Larger Zurich-based rival UBS AG (UBSN) announced 3,500 job cuts last year, with about 1,575 of those at the investment bank.
Deutsche Bank’s co-Chief Executive Officers, Anshu Jain, 49, and Juergen Fitschen, 63, who took over in June, may focus on cutting costs and disposing of unwanted assets when they announce their strategy in September, Kian Abouhossein and Amit Ranjan, London-based analysts at JPMorgan Chase & Co. (JPM:US), said in a July 3 note.
The bank may save 2.5 billion euros, led by job reductions, cost-cutting and lower pay at the investment bank, the analysts said. The unit could trim as much as 20 percent of its staff, Abouhossein and Ranjan estimated.
The Deutsche Bank business has about 31,799 employees, including back-office workers, the highest among global peers, the JPMorgan analysts said. If Deutsche Bank doesn’t cut any jobs in the current “weak” environment, its revenue per employee at the investment bank may fall to the lowest compared with Goldman Sachs Group Inc. (GS:US), Morgan Stanley (MS:US), UBS, Barclays Plc and Credit Suisse in 2013, according to JPMorgan estimates.
Handelsblatt reported Deutsche Bank’s planned job cuts earlier today.
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