Deutsche Bank AG (DBK), Europe’s biggest lender by assets, is placing Dubai-based equity analysts on consulting contracts as it seeks to avoid job cuts in the Middle East, according to two people with knowledge of the matter.
Between three and six analysts are affected by the move, the people said, asking not to be identified as the changes aren’t public. While the analysts will lose some benefits they’ll still receive medical cover and be eligible for a bonus, one of the people said. They’ll continue to provide research exclusively for the bank as before, the people said.
Global banks, including Morgan Stanley (MS:US) and Credit Suisse Group AG (CSGN), are reducing their equities business in Dubai as trading dwindles and clients postpone share sales. The average number of shares in Dubai’s benchmark index traded daily is still about 50 percent down on the figure for 2008, according to data compiled by Bloomberg.
Michael Lermer, a Dubai-based spokesman for Deutsche Bank in the Middle East and North Africa, said the bank’s scope of service and commitment to the region remains unchanged, while declining to provide any further comment.
Deutsche Bank may post a loss of 210 million euros ($284 million) compared with a profit of 147 million euros in the fourth quarter of 2011, when it reports earnings tomorrow, according to the average estimate of nine analysts surveyed by Bloomberg. Goldman Sachs and three of its biggest U.S. competitors saw their combined net income jump 92 percent annually to $9.73 billion in the period. Deutsche Bank shares rose 1.2 percent to 37.31 euros at 1:02 p.m. in Frankfurt. The stock advanced about 13 percent so far this year.
Anshu Jain and Juergen Fitschen, the bank’s co-Chief Executive Officers, are reducing pay, eliminating almost 2,000 jobs and have combined Deutsche Bank’s asset and wealth management divisions to help lift after-tax return on equity, a measure of profitability, to more than 12 percent by 2015 from 8 percent in 2011.
The co-ceos pledged to increase Deutsche Bank’s core Tier 1 capital ratio under stricter Basel III rules to 7.2 percent by the end of last year and to more than 10 percent by the end of 2015. Its biggest competitors will reach similar levels months or years sooner, according to forecasts from the banks.
Deutsche Bank is considering reducing bonuses for investment bankers in Europe by as much as 20 percent on average for 2012, while bankers in New York will see smaller declines, four people briefed on the matter said Jan. 14.
The cuts may range between 10 percent and 20 percent on average in Europe, the Middle East and Africa, while bonuses in locations that performed better or where competition for staff is stronger will fall less, said the people, who asked not to be identified because the matter is private. The plans are preliminary and may change, they said.
To contact the reporters on this story: Stefania Bianchi in Dubai at firstname.lastname@example.org; Zahra Hankir in Dubai at email@example.com
To contact the editor responsible for this story: Dale Crofts at firstname.lastname@example.org