Deutsche Bank to cut 1,500 jobs at investment division

DEUTSCHE BANK’S new co-chief executive, Anshu Jain, is to cut 1,500 jobs at the group’s investment bank, which he helped build, as part of a drive to save €3 billion after a profit slump due to the euro zone crisis.

The cuts represent about 15 per cent of staff at the investment banking division, which for years has generated the lion’s share of profits.

It also marks an about-turn for the German bank, which in April said it saw no need for layoffs.

The plan to cut a total of 1,900 jobs mostly outside Germany comes as investment banks across the world are having to retrench to meet stricter bank capital rules.

The cost-cutting forms part of a broader overhaul at Germany’s biggest bank under new co-chief executives Mr Jain and Jürgen Fitschen, who took the helm in June. Mr Jain used to run the investment bank and its ranks of debt, currency, stock and commodity traders, known in the industry as “Anshu’s Army”.

“Our prospects and our future view on profitability is different today than it was in 2010,” Mr Jain said in his first call with analysts since taking over as co-chief.

He said profit expectations had moved “closer to our grim scenario”.

“Difficult economic conditions and financial markets, increased regulatory oversight and litigation are known headwinds for us and the industry. These headwinds don’t excuse us from growth,” Mr Jain said. “Put simply – our cost base is too high.”

Deutsche Bank’s shares reversed early losses after the job cuts were announced to gain more than 2 per cent. The bank also said it aimed to fulfil capital requirements by cutting costs, shedding risky assets and overhauling businesses which lack promise.

Fund manager Helmut Hipper from Union Investment – one of Deutsche Bank’s top 20 shareholders – said the results from the bank’s sales and trading business were not that bad compared with peers. “Deutsche Bank is benefiting from expanding its business and gaining market share,” Mr Hipper said, adding that the bank still needed to explain why its cost base was so high.

Swiss rival UBS also reported a big fall in profits yesterday after losses at its investment bank. – (Reuters)