Deutsche Bank to cut over 7,000 jobs

German financial giant Deutsche Bank that the ‘associated personnel reductions are underway.’ (AFP)
Updated 24 May 2018

Deutsche Bank to cut over 7,000 jobs

FRANKFURT: Deutsche Bank said on Thursday it will reduce global staff levels to well below 90,000 from the current 97,000, as part of a broad restructuring to reduce costs and restore profitability.

The bank said it would cut headcount by 25 percent in its equities sales and trading business following a review of the business.

The reductions will decrease the investment bank’s leverage exposure by €100 billion ($117 billion), or 10 percent, with most of the cuts to take place this year, Deutsche said.

“We remain committed to our Corporate & Investment Bank and our international presence – we are unwavering in that,” Chief Executive Officer Christian Sewing said in a statement.

“We are Europe’s alternative in the international financing and capital markets business. However, we must concentrate on what we truly do well.”

The details on the bank’s strategy come ahead of the bank’s annual general meeting on Thursday.

Shareholders, fed up with a languishing share price and dwindling revenues, said they would call on the bank’s management to speed up the recovery process at the AGM.

The loss-making bank said after an abrupt management reshuffle last month that it aimed to scale back its global investment bank and refocus on Europe and its home market after three consecutive years of losses. It had flagged cuts to US bond trading, equities, and the business that serves hedge funds.

Thursday’s shareholder meeting comes after months of turmoil for the lender, Germany’s largest.

Deutsche Bank Chairman Paul Achleitner last month abruptly replaced CEO John Cryan with Sewing amid investor complaints that the bank was falling behind in executing a turnaround plan.

Deutsche’s shares are down more than 31 percent so far this year.

The bank is also under pressure from credit ratings agencies. Standard & Poor’s is expected to say by the end of the month whether it will cut Deutsche Bank’s rating after putting it on “credit watch” in April.

Dubai real estate market recovery to be seen as of 2022: S&P

Updated 20 February 2019

Dubai real estate market recovery to be seen as of 2022: S&P

  • The outlook on property was part of a challenging assessment of the credit-worthiness of the emirate
  • S&P was generally comfortable with the credit ratings of the emirate’s banking system

DUBAI: S&P Global, the ratings agency, painted a grim picture for the real estate sector in Dubai, with a meaningful recovery in property prices expected only after 2022.
At a presentation to journalists in the Dubai International Financial Center, S&P analyst Sapna Jagtiani said that under the firm’s “base case scenario,” the Dubai real estate market would fall by between 5 and 10 percent this year, roughly the same as the fall in 2018, which would bring property prices to the levels seen at the bottom of the last cycle in 2010, in the aftermath of the global financial crisis.
“On the real estate side we continue to have a very grim view of the market. While we expect prices to broadly stabilize in 2020, we don’t see a meaningful recovery in 2021. Relative to the previous recovery cycle, we believe it will take longer time for prices to display a meaningful recovery,” she said.
S&P’s verdict adds to several recent pessimistic assessments of the Dubai real estate market. Jagtiani said that conditions in the other big UAE property market, in Abu Dhabi, were not as negative, because “Abu Dhabi never did ramp up as much in 2014 and 2015 as Dubai.” S&P does not rate developers in the capital.
She added that a “stress scenario” could arise if government and royal family related developers — such as Emaar Properties, Meraas, Dubai Properties and Nakheel — which have attractive land banks and economies of scale, continue to launch new developments.
“In such a scenario, we think residential real estate prices could decline by 10-15 percent in 2019 and a further 5-10 percent in 2020. In this case, we expect no upside for Dubai residential real estate prices in 2021, as we expect it will take a while for the market to absorb oversupply,” she said.
S&P recently downgraded Damac, one of the biggest Dubai-based developers, to BB- rating, on weak market prospects.
However, Jagtiani said that, despite the “significant oversupply” from existing projects, several factors should held stabilize the market: Few, if any, major product launches; improved affordability and “bargain hunting” by bulk buyers; and a resurgence of Asian, especially Chinese, investor interest in the market.
Jagtiani also said that government measures such as new ownership and visa regulations and reduction in government fees could help prevent prices falling more sharply, as well as “increased economic activity related to Dubai Expo 2020, which is expected to attract about 25 million visitors to the emirate.”
The outlook on property was part of a challenging assessment of the credit-worthiness of the emirate. “In our view, credit conditions deteriorated in Dubai in 2018, reducing the government’s ability to provide extraordinary financial support to its government related entities (GREs) if needed,” S&P said in a report. “The negative outlook on Dubai Electricity and Water
Authority (DEWA) partly reflects our concern that a real estate downturn beyond our base case could out increased pressure on government finances,” the report said.
It pointed out that about 70 percent of government revenues come from non-tax sources, including land transfer and mortgage registration fees, as well as charges for housing and municipality liabilities, as well as dividends from real estate developers it controls, like Emaar and Nakheel.
S&P was generally comfortable with the credit ratings of the emirate’s banking system, which has an estimated 20 percent exposure to real estate. “Banks in the UAE tend to generally display a good level of profitability and capitalization, giving them a good margin to absorb a moderate increase in risks,” the report said.