Deutsche Chief Executive Christian Sewing said there will be “painful but regrettably unavoidable” job losses across the U.S. and Asia as the lender cuts back its corporate financial services. The bank said it is planning “significant” job cuts; the BBC said it estimates thousands of jobs are at risk, with about 40,000 employees at its corporate and investment banking unit.
The cutbacks follow a significant drop in first-quarter revenues at the financial institution’s corporate and investment banking operations. Deutsche posted significant losses in 2015 and 2016 linked to restructuring and litigation costs. Revenues for Q1 2018 declined 5 percent to $8.48 billion, with its corporate and investment banking units reporting a 13 percent decline to $15.74 billion.
Overall, net income for Q1 was only about a fifth of what it was for Q1 2017, marking more trouble for the bank, whose shares on the New York Stock Exchange have slumped 21 percent over the last year.
“Deutsche Bank is deeply rooted in Europe,” said Sewing, the bank’s new CEO after previous chief John Cryan was let go earlier this month. “Here, we want to provide our clients access to global financing and treasury solutions. This is what we will focus on more decisively.”
The disappointing quarterly figures follow revelations earlier this month that Deutsche had mistakenly made a $35 billion payment to an exchange about a week after Easter. The error occurred during its daily collateral adjustment, and the funds landed at Deutsche Boerse AG’s Eurex clearinghouse, reports in Bloomberg said.
The mistake highlighted shortcomings of the bank’s “bear trap” system, set up in March 2014 following an audit at the bank, the result of another collateral payment error.
The Q1 results also follow news last month that Deutsche planned to reduce its corporate banking services by divesting its Private & Commercial Banking unit in Portugal to ABANCA Corporación Bancaria.