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

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.


China's aviation regulator raised concerns with Boeing on 737 MAX design changes

Updated 12 December 2019

China's aviation regulator raised concerns with Boeing on 737 MAX design changes

  • China is reviewing the airworthiness of the plane
  • China was first country to ground plane in March

BEIJING: China’s aviation regulator raised “important concerns” with Boeing Co. on the reliability and security of design changes to the grounded 737 MAX, it said on Thursday, but declined to comment on when the plane might fly again in China.
China is reviewing the airworthiness of the plane based on proposed changes to software and flight control systems according to a bilateral agreement with the United States, Civil Aviation Administration of China (CAAC) spokesman Liu Luxu told reporters at a monthly briefing.
He reiterated that for the plane to resume flights in China, it needed to be re-certified, pilots needed comprehensive and effective training to restore confidence in the model and the causes of two crashes that killed 346 people needed to be investigated with effective measures put in place to prevent another one.
China was the first country to ground the 737 MAX after the second crash in Ethiopia in March and had set up a task force to review design changes to the aircraft that Boeing had submitted.
The US Federal Aviation Administration (FAA) will not allow the 737 MAX to resume flying before the end of 2019, its chief, Steve Dickson, said on Wednesday.
Once the FAA approves the reintroduction into service, the 737 MAX can operate in the United States, but individual regulators could keep the planes grounded in other countries until they complete their own reviews.
“Due to the trade war, the jury is still out on when China would reintroduce the aircraft,” said Rob Morris, Global Head of Consultancy at Ascend by Cirium.
Chinese airlines had 97 737 MAX jets in operation before the global grounding, the most of any country, according to Cirium Fleets Analyzer.