Deutsche Bank Implements Hiring Freeze, Stock Slides

Tyler Durden's picture

While much attention in recent weeks has fallen on Deutsche Bank's balance sheet, with concerns over both the bank's capitalization as well as its liquidity forcing its stock price to all time lows as recently as two weeks ago, today we got a timely reminder that the bank also has substantial income statement problems when Bloomberg reported that the biggest German lender is implementing a companywide hiring freeze as CEO John Cryan "seeks to lower costs and shore up investor confidence."

However, the confirmation that the bank continues to hemorrhage cash and is in expense-slashing mode, and which hits just a day after Deutsche Bank completed a tack-on bond offering in which it sold a total of $4.5 billion in 5 year bonds in two tranches, paying junk bond spreads for the privilege of obtaining funds, will hardly "shore up investor confidence." If anything it will short it, or perhaps short DBK stock, which was down 2.5% to €12.04 in German trading as of this writing.

As Bloomberg adds, in a message to divisional chief operating officers on Wednesday, the Frankfurt-based lender said "hiring will be put on hold with immediate effect." The hiring freeze affects all divisions excluding some control functions such as compliance. Arguably this means that i) the bank was hiring as concerns mounted that it was on the precipice and ii) that it actually had applicants who wanted to join the bank even as its stock plummeted to all time lows.

“It would be desirable if Deutsche Bank was restrictive in terms of new hires as they need to cut costs,” said Philipp Haessler, an analyst at Equinet Bank AG in Frankfurt, with a neutral recommendation on the shares. “Another way to cut costs is reducing the bonus pool.”

When reached by Bloomberg, a DB spokesman declined to comment on the hiring freeze, referring to an announcement on Oct. 6, when the bank said it reached an agreement with labor representatives to cut 1,000 positions in Germany as part of the wider restructuring plan. The lender employed more than 101,000 people in June, up from 98,138 at the end of 2014. Analysts at JPMorgan Chase & Co. have estimated that Deutsche Bank could save as much as 1.9 billion euros ($2.1 billion) this year largely through a hiring freeze.

Among other initiatives launched by Cryan, who tried to reassure investors that the bank is stable, was his assurance that the bank doesn’t plan to raise capital; instead it has approached the bond market on two separate occasions paying surprisingly high yields for the privilege of obtaining much needed dunds. And then there is the ongoing feud with the DOJ over the $14 billion RMBS settlement: Deutsche Bank’s negotiations with the Justice Department to resolve a years-long investigation into residential mortgage-backed securities are continuing, Bloomberg reports.

Deutsche Bank is holding informal talks with securities firms to explore options including raising capital should mounting legal bills require it, Bloomberg also reports, adding that the lender could also revisit selling its Deutsche Postbank unit or parts or all of its asset-management division, according to the people. Cryan has already said Deutsche Bank may fail to be profitable this year after posting the first annual loss since 2008 last year. He also signaled that the lender may have to deepen cost cuts.

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Vinividivinci's picture

Hiring freeze = "shoring up investor confidence"...bullish...indeed.

bamawatson's picture

titanic implements hiring freeze

Government needs you to pay taxes's picture

Windowdressing for the big bankster bonuses to be served promptly following the end of the year.  Long rope.

stocktivity's picture

Deflation coming in all directions soon and that is the one thing the Fed fears.  Even Walmart Chinese junk will be priced down.

gregga777's picture

Wal-Mart's Chinese junk isn't selling anyway and they've already priced it way way down.

Grandad Grumps's picture

Prediction: Douche-bank will bring down the ECB... if such a thing is possible.

DetectiveStern's picture

They were planning on opening a new office here in Manchester. I called bullshit as soon as I heard it.

williambanzai7's picture

Women children and managing directors first...

zipit's picture

Time to get long nail guns and nails again.

gregga777's picture

And nooses and guillotines. There's lots of work to be done executing banking gangsters and their political parasite servants.

GoldToDaMoon's picture

"Hiring Freeze" is nothing - how about a proper bloodbath of sackings, layoffs and redundancies... little industrial companies at the mercy of cheap foreign products from low wage countries had no choice but to dump highly skilled employees, no bailouts for them...

Government needs you to pay taxes's picture

Funny, one doesnt see Vietnamese/Chinese/Malaysian investment banksters eating the lunch their Western counterparts based on offering better service for less money.

gregga777's picture

The banking gangsters won't let their political parasite servants license those banks to operate in Deutscheland or Euroland.

gregga777's picture

But their mistake is that they didn't own the government and the political parasites like the criminal banking gangster scumbags.

RiverRoad's picture

Sackings, layoffs, redundancies, pay cuts, starting at the TOP.

RawPawg's picture

Benefits Packages Includes

Unused Desks,Phones,Light bulbs,and the Biggest Prize...Slightly Used Rolls Of Toilet Paper

First Come,First Gets

HURRY!!!!

silverer's picture

Standard practice for a profitable bank.

Debugas's picture

banking sector being 60%+ of the economy is a 'yuge overbloat

it should shrink down to less than 10%

so it is still a very long way to go and DB is just a first step in the long list of banks to follow suite

Heavenlysunshine's picture

Members of the Rothschild banking clan are feuding, maybe moving

some of their assets from Frankfurt to Paris, Rome or even Tel Aviv.

gregga777's picture

Hiring freezes are nickel and dime desperation moves. I bet they are really regretting paying out € billions in bonuses every year since the Greater Depression began in 2007. They could really use that now to shore up their capital base. Ah well, the German government will bail out the criminal banking gangster operations named Deutsche Bank and Commerzbank.

I'm sure that the German People and especially Alternative fur Deutscheland will be just fine with two massive GDP crushing bailouts. When their derivatives trades counter parties begin failing DB will only need about €46 trillion, right. That's only, what, about 12X German GDP?

I'm sure all Germans will be happy to give up everything—homes, cars, savings, properties, all current and future pension benefits, etc.—to save DB. After all, it's for the criminal banking gangster scumbags. Right!

[Hopefully they'll hide some gold and silver. I've got some guns and ammunition that I'd like to sell them. But, I don't accept Euros. Only gold and silver. I hope they understand.]

Government needs you to pay taxes's picture

Surely there is a tax that'll fix this problem.

gregga777's picture

HANG ALL
BANKING
GANGSTERS

It's for the children!!!

rosiescenario's picture

In order to recently sell some capital raising bonds, DB had to pay junk bond interest rates...just another hit to their P&L.

 

To me it is obvious that DB is going to have to sell more equity...my guess is that it will be at a substantially lower price than today's.

 

 

rosiescenario's picture

"Among other initiatives launched by Cryan, who tried to reassure investors that the bank is stable, was his assurance that the bank doesn’t plan to raise capital..."

 

....so the bond sales they just did were not to raise capital?

 

DB cannot afford to raise all the capital they need by selling bonds at junk interest rates. They cannot afford the added interest expense and they would also swamp the appetite of bond buyers...more bons junk bonds sold would raise doubts about the bank's ability to cover the interest.

 

 

....which brings us back to DB having to sell more equity and at what price?

Panic Mode's picture

The only thing they can afford to hire is AIR.