Deutsche Bank said it would slash 15,000 jobs, about 15 percent of its global workforce. Shares in the bank plunged as new CEO John Cryan gave a stark portrayal of the many challenges facing Germany's largest bank.
John Cryan in his first appearance before the press
The Deutsche Bank co-CEO, Mr. Cryan, said Thursday the bank would cut 15,000 jobs and close operations in 10 countries as part of a far-reaching reorganization.
Deutsche Bank said on Thursday it would cut 15,000 jobs, about 15 percent of its global workforce, as new chief executive John Cryan in stark terms prepared investors and employees of Germany’s largest bank for a period of lean times in the coming years.
The new restructuring plan is designed to return Germany’s largest bank to sustainable profitability and extract it from a series of legal woes and liabilities that have dogged the institution since the global financial crisis in 2008.
In his first appearance before the press since taking over in July, Mr. Cryan said Deutsche Bank would cut 9,000 employees of the bank and 6,000 workers at service providers. Some 4,000 full-time employees would be cut from Germany, while the bank will close operations in 10 countries, such as Mexico, Finland, Denmark and Norway. Its German retail subsidiary Postbank, which has about 20,000 employees, will also be either sold or taken public – a move that had already been announced in the spring.
The bank’s share price plunged 5.8 percent in Frankfurt to €25.94 by 11:00 a.m local time, though it has recovered slightly since. Late Wednesday, the bank had also announced it was suspending its dividend payments in 2015 and 2016 – the first such move in about half a century. Employee bonuses will also be curtailed, though Mr. Cryan would not say whether they would be cut entirely.
While job cuts had been widely expected at the bank, Mr. Cryan laid out in stark terms a series of challenges that the bank will face in revamping its crumbling technical infrastructure, ending thousands of legal disputes, rebuilding morale among employees, and closing a series of unprofitable business units in order to put the bank on a sustainable footing for the long haul.
Mr. Cryan prepared investors for a period of poor financial results as the bank cleans house over the coming years, and signaled that a turnaround would only begin in 2018. Job cuts and other restructuring costs will amount to about €3 billion to €3.5 billion. At the end of it all, the bank hopes to trim its annual costs by about €3.8 billion per year.
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