Deutsche Bank begins cull in $8.3bn reinvention

Christian Sewing, CEO of Deutsche Bank, has called the job cuts a “reinvention” of Germany’s flagship lender. (AFP)
Updated 08 July 2019
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Deutsche Bank begins cull in $8.3bn reinvention

  • Experts say cuts expected to hit harder in US and Europe

FRANKFURT: Deutsche Bank laid off staff in Asia on Monday as it began cutting 18,000 jobs as part of a €7.4 billion ($8.3 billion) “reinvention” set to tip Germany’s largest lender into yet another annual loss.

In a retreat from a long-held ambition to make its struggling investment bank, which employs 38,000 people, a force on Wall Street, Deutsche Bank said on Sunday it would scrap its global equities operations and cut some in fixed income roles.

Shares in Deutsche Bank, which has almost 91,500 staff around the world, were slightly lower in Frankfurt as the bank’s finance chief said there was “significant uncertainty” whether it would break even in 2020.

CEO Christian Sewing told journalists from the bank’s London office, where many of the cuts are expected, that he was “doing nothing short of reinventing” Deutsche Bank, which will have been in the red for four out of the past five years as it continues to come to terms with a series of setbacks in recent years.

Bankers seen leaving Deutsche Bank’s Sydney office on Monday said they had been laid off, but declined to be identified as they were due to return later to sign redundancy packages. Sewing said job cuts would continue in London and New York.

JP Morgan analysts called the plan “bold and for the first time not half-baked” but questioned the credibility of the execution, revenue growth and employee motivation.

Ratings agency Moody’s said Deutsche Bank faced “significant challenges” to execute the plan swiftly and said it would keep its negative outlook on the bank.

“It’s a risky maneuver, but if it succeeds, it has the potential to bring the bank back on course,” a source close to one of Deutsche Bank’s top 10 biggest shareholders said.

Deutsche Bank gave no geographic breakdown for the job cuts, although the bulk are expected in Europe and the US.

In Sydney, Hong Kong and elsewhere in the Asia-Pacific region the working day began with cuts and several Deutsche bankers said entire teams in sales and trading were going.

A person with knowledge of the bank’s Australia operations said its four-strong equity capital markets (ECM) team was being disbanded, but most of its mergers and acquisitions (M&A) team was not immediately affected.

Game over

Deutsche Bank used to rank among the top 10 banks in league tables for ECM deals in Asia, but had slipped in recent years, hitting 17th last year and 18th in 2019, Refinitiv data showed. So far this year, it ranks eighth regionally for M&A activity.

Deutsche had some 4,700 staff at its main regional offices in Sydney, Tokyo, Hong Kong and Singapore, factsheets on its website showed.

Its investment banking team for the Asia-Pacific region had about 300 people before the cuts, of which 10 to 15 percent will be laid off, almost all in its ECM division, said a senior Asia banker with direct knowledge of the plans.

One equities trader in Hong Kong said the mood was “pretty gloomy” as people were called in to meetings. “They give you this packet and you are out of the building,” he said.

Several workers left offices holding envelopes with the bank’s logo. Three employees took a picture of themselves beside branch logo, hugged and hailed a taxi.

“If you have a job for me please let me know. But do not ask questions,” said one employee.

A spokeswoman would not comment but said the bank would be “as sensitive as possible when implementing these changes.”

“We are creating a bank that will be more profitable, leaner, more innovative and more resilient,” Sewing wrote in a note to staff.


Funds managing $2 trillion urge cement makers to act on climate impact

A general view of Gulf Cement Company in Ghalilah, Ras al Khaimah, United Arab Emirates July 16, 2019. (REUTERS)
Updated 23 July 2019
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Funds managing $2 trillion urge cement makers to act on climate impact

  • The cement industry produces 7 percent of the world’s carbon dioxide emissions, according to the International Energy Agency, meaning that if it were a country, it would be the third largest emitter, behind the US and China

LONDON: European funds managing $2 trillion in assets called on cement companies to slash their greenhouse gas emissions on Monday, warning that a failure to do so could put their business models at risk.
Some asset managers are ramping up engagement with heavy polluters to demand a faster transition to a cleaner economy.
“The cement sector needs to dramatically reduce the contribution it makes to climate change,” said Stephanie Pfeifer, CEO of the Institutional Investors Group on Climate Change, which has more than 170 members, mainly European pension funds and asset managers. “This is ultimately a business-critical issue for the sector,” Pfeifer said in a statement.
The group said investors had written to cement or construction materials companies including Ireland’s CRH, Franco-Swiss group LafargeHolcim and France’s St. Gobain to demand they achieve net zero carbon emissions by 2050.
They also noted that Germany’s HeidelbergCement had already adopted the target. The funds urged all cement companies to align themselves with the 2015 Paris agreement to combat global warming, engage with policymakers to ensure an orderly transition to a low carbon economy, and increase their reporting of climate risk.
“Construction materials companies may ultimately risk divestment and lack of access to capital as an increasing number of investors seek to exclude highly carbon-intensive sectors from their portfolios,” said Vincent Kaufmann, CEO of the Ethos Foundation.

FASTFACT

The cement industry produces 7 percent of the world’s carbon dioxide emissions, according to the International Energy Agency.

Signatories collectively manage assets worth $2 trillion and include Aberdeen Standard Investments, BNP Paribas Asset Management, Sarasin & Partners and Hermes EOS.
Although funds are increasingly engaging with companies from airlines to carmakers on emissions, few are calling for the systemic transformation of the global economic system that scientists increasingly argue is needed to prevent runaway climate breakdown.
The cement industry produces 7 percent of the world’s carbon dioxide emissions, according to the International Energy Agency, meaning that if it were a country, it would be the third largest emitter, behind the US and China.
With climate campaigners traditionally focused on fossil fuel companies, the European cement sector has received comparatively little scrutiny until recently.
On Tuesday, police arrested six climate activists from civil disobedience group Extinction Rebellion at a protest aimed at disrupting a site in east London belonging to London Concrete, a unit of LafargeHolcim.
In June last year, a report from think-tank Chatham House concluded that although there was no “silver bullet” to reduce emissions from cement, it should be possible to deploy a range of policies and technologies to achieve deep decarbonization.