Deutsche Bank to cut 1,900 jobs as profits drop
FRANKFURT, Germany (AP) — Deutsche Bank said Tuesday it plans to cut about 1,900 jobs, most of them outside Germany, as Europe's debt crisis hurt profits at its investment banking business.
Germany's largest bank, which employs nearly 101,000 people, said second quarter earnings slid 46 percent to €661 million from €1.233 billion in the same three months a year ago.
Market turbulence and subdued client activity due to Europe's problems with too much government debt were behind the decline, with revenues down 6 percent to €8.0 billion.
At its investment banking division, for example, income fell as fewer companies came to the bank requesting its services to issue shares, or for advice on buying or merging with other companies. Those activities can earn lucrative fees for banks.
Revenue from trading debt securities — one of the investment categories most affected by the crisis — was also down. The company said that was partly due to the company taking "deliberately lower levels of risk" due to subdued trading volumes. It said it would continue shedding risky assets in the months ahead.
Overall, Deutsche Bank's corporate banking and securities division, where share underwriting and debt trading are located, saw revenues fall by €451 million to €3.5 billion.
"The European sovereign debt crisis continues to weigh on investor confidence and client activity across the bank," the bank said.
European governments such as Spain and Italy are struggling with high levels of debt, and the prospect they might default or need bailouts has unnerved markets. The debt crisis has made companies and consumers reluctant to borrow, spend and invest.
The bank said about 1,500 of the job cuts will be in the investment banking business and in related infrastructure areas. The cutback will contribute some €350 million to an overall target of €3 billion ($3.8 billion) in savings.
Shares in the bank were up 0.4 percent at €24.94 in late afternoon trading in Europe.
The earnings statement was the first reported under new co-CEOs Anshu Jain and Juergen Fitschen, who took over from Josef Ackermann in May.
Jain, who had run the investment banking unit before taking over as CEO, said during a conference call with stock market analysts that the debt crisis had developed "more towards our more grim scenario than our good scenario."
The bank said it was looking to change its ethics policy and compensation practices to meet the expectations of regulators, government and the public. Discussing the conduct policy, Jain said the bank would "make sure that the tone at the top is crystal clear."
The bank is facing uncertain consequences from an investigation into the alleged rigging of benchmark interest rates known as Libor, or London Interbank Offered Rate, by employees of different banks. Deutsche Bank has said it is cooperating with investigations from authorities including the U.S. Department of Justice and the Securities and Exchange Commission, the U.S. financial market regulator.
Bank officials did not take questions about the Libor investigation during the conference call. Chief Financial Officer Stefan Krause said the bank has found the questionable activities were limited "to a small group of individuals who were acting on their own initiative" and have already been sanctioned. The bank has said that one trader left the firm last year.
