Merging retail operations has already cut outlays by half a billion euros, bringing Germany's largest bank closer to its cost-cutting target.
Leaner and meaner.
Deutsche Bank is making progress in integrating its Postbank subsidiary into its own retail operations, which will entail a loss of 750 jobs at the headquarters of the combined consumer banking business by the end of next year, Handelsblatt has learned.
That amounts to about 15 percent of head-office staff, according to insiders, though it is impossible from the outside to determine who is employed doing what. Sources say about half that number has already been eliminated through buyouts. The bank hopes to reach an agreement with the works councils on the remaining jobs by mid-2019.
Deutsche Bank earned less in the second quarter but it made progress with cost cuts, which analysts see as key to its future profitability. Its DWS fund unit has disappointed investors with a net fund outflow totaling €4.9 billion.
In addition, the bank wants to eliminate a further 1,200 jobs in back-office operations by 2022, and hopes to conclude talks on those positions by the end of the year.
In January, Deutsche Bank CFO James von Moltke said that the bank trimmed a half billion euros in costs from its retail operations last year, in spite of costs associated with merging the two operations and investment in its IT platform.
Chief Executive Christian Sewing aims to realize €900 million ($1.02 billion) in annual cost savings by 2022, a goal he reaffirmed earlier this month. To avoid duplication and to achieve the necessary synergies, the bank will form a single team for each product line while retaining the separate Postbank and Deutsche Bank brands.
Each team will have its own headquarters, divided between Postbank’s old headquarters in Bonn and Deutsche’s in Frankfurt. The headquarters for retail accounts, consumer credit and postal services, for instance, will be in Bonn, as will corporate accounts and payments services for both individual and company customers.
The headquarters for investment products, insurance and retail deposits will be in Frankfurt. Ditto for business and company services and products. Real estate financing will also be headquartered in Frankfurt. Integration of the two real estate units is well-advanced, insiders say.
Merging the two operations over the past nine months has been a delicate task. Deutsche pledged to avoid layoffs until 2021, so it must rely on voluntary buyouts for a sign-off from the works councils to proceed with any.
Germany’s largest bank is failing to convince the market that it is on the right track to long-term profitability.
On the plus side, Deutsche’s plan to locate many of the auditing and compliance functions within the retail bank itself, instead of relying on the parent bank to handle these, has won the wholehearted approval of regulators.
The complexity of this merger is one of the main reasons insiders have been skeptical about any merger with Commerzbank. To take that step before the integration of the two retail units is complete would be an overwhelming task, according to staff members and works councils.
Yasmin Osman covers banking for Handelsblatt in Frankfurt. Darrell Delamaide adapted this article into English for Handelsblatt Today. To contact the author: [email protected]
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