Deutsche Bank Crashes After Profit Warning, Confirmation Of Massive Layoffs

One day after the WSJ reported that the biggest German bank is set to "decimate" its workforce, firing 10,000 workers or one in ten, this morning Deutsche Bank confirmed plans to cut thousands of jobs as part of new CEO Christian Sewing's restructuring and cost-cutting effort. The German bank said its headcount would fall “well below” 90,000, from just over 97,000. But the biggest gut punch to employee morale is that the bank would reduce headcount in its equities sales and trading business by about 25%.

The announcement came as Deutsche Bank was set for tough questions from investors at its annual general meeting in Frankfurt, including a vote of no confidence for Chairman Paul Achleitner who defended the supervisory board’s decision last month to replace former Chief Executive John Cryan as “unavoidable.” As the WSJ reports, the new CEO, Christian Sewing, laid out strategic priorities for the lender, telling investors that the lender remains committed to investment banking.

Paul Achleitner
 

“This time is different,” Sewing said, referring to the bank’s years-long habit of missing cost-control targets although markets naturally seem skeptical. The bank had already cut 600 employees at the investment bank in the past seven weeks.


And in what Wall Street took as a tacit profit warning, the CEO warned that second-quarter results would reflect a “revenue environment [that] remains challenging,” particularly in the investment bank. He didn’t provide figures. The news sent DBK stock plunging 3.5%, just above €10, and rapidly approaching the all time lows hit during the bank's existential crisis days of September 2016.

Restructuring and severance charges will also hurt full-year results Sewing said, warning that 2018 results would be hit by restructuring charges of up to €800 million ($935.9 million). Sewing, like Mr. Cryan before him, also said Deutsche Bank aims to find itself in fewer media headlines, another goal it has missed. “It won’t do us any harm to be a bit more boring,” Sewing told investors.

Thursday’s announcement of job cuts follow months of thorny debate over how fast and deep job losses should be at the beleaguered bank, the WSJ reported Wednesday. The process has divided senior executives and left investors unconvinced. The bank’s shares have fallen by nearly a third this year to their lowest level since a crisis of confidence hit the lender in late 2016.

At the investor meeting, the bank’s supervisory board and senior executives are facing probing questions about last month’s chief executive handoff and the tough choices the lender has to make. They’re also confronting a proposal to break up the company, although with nearly €50 trillion gross notional in derivatives on the bank's books that may be next to impossible absent an ECB backstop.

The meeting follows a messy year for Deutsche Bank. The April 8 ouster of former CEO Mr. Cryan in the middle of his management contract appeared botched to some clients and investors, and shook employees launching an exodus of some the bank's most prominent bankers.

Comments

nmewn espirit Thu, 05/24/2018 - 08:18 Permalink

Love their (Wells Fargo) new marketing campaign which is basically...

"Yep, we were born in 18whatever. We screwed you over, you didn't like it, we get that. Now we have reborn ourselves in 2018 and will never screw you over again!"

...lol...I swear, I should have went into marketing, you can say the most outrageous, outlandish, disconnected from reality things in the world and no matter if it helps or hurts the client, you still get paid for it.

They bought it ;-)

In reply to by espirit

DingleBarryObummer nmewn Thu, 05/24/2018 - 08:22 Permalink

you can say the most outrageous, outlandish, disconnected from reality things in the world and no matter if it helps or hurts the client, you still get paid for it.

That is only true in a communistic constantly-inflationary centrally managed economy.  The capital mis-allocation has to go somewhere; you just have to lie big enough to attract it to yourself.  Currency backed by nothing has many negative side-effects. 

In reply to by nmewn

nmewn DingleBarryObummer Thu, 05/24/2018 - 09:05 Permalink

"That is only true in a communistic constantly-inflationary centrally managed economy.

Yes.

That is what I try to explain about the Fed & Keynesian economics/policies all the time, it is a crony-socialistic construct (not a capitalist one) designed specifically for government funding of war & welfare programs. 

My "friends" on the left constantly tinker around with it, trying to strip out the one "government benefit" while keeping the other, they say it's just never been properly done citing the Soviet Empire, Mao, the Third Reich, Ortega, Castro, Chavez etc, a work in progress so to speak, that they'll someday get right no matter how many historic failures they have ;-)

In reply to by DingleBarryObummer

A Sentinel nmewn Thu, 05/24/2018 - 10:08 Permalink

Half of us households can’t pay their bills. That’s intermediate social breakdown. As that percentage grows, there’s increasing risk of unrest. I am certain that there’s some plan to focus and channel that event. 

The up-side is that they planned to have Hilary running the show when this happens - and she’s not.

In reply to by nmewn

nmewn A Sentinel Thu, 05/24/2018 - 17:02 Permalink

"I am certain that there’s some plan to focus and channel that event."

We can always count on the statists (especially the socialist variety) to give us yet another reason for their existence. It's like a make-work project that never ends, no matter how bad they have screwed it up before, now we are supposed to need them moar than ever! ;-)

In reply to by A Sentinel

NoPension nmewn Thu, 05/24/2018 - 08:26 Permalink

That's nuttin....

  Watch ten minutes of msnbc, you will start wondering what planet you're on.

 They've managed to script an entire narrative...stick to it..modify it as revelations come forth...and here is the best part!!!!....

 .....Actually find a complement of seemingly educated and worldly people, who are perfectly fine to go along with the charade! It beggars belief, and boggles the fucking mind!

In reply to by nmewn

lester1 nmewn Thu, 05/24/2018 - 08:20 Permalink

Deutsche Bank, Bitcoin, and Tesla are all toxic mal investments, and propped up due to massive money printing by central banks. Without their meddling in the free market, none of these toxic mal investments would survive. In the end a lot of people who invested in this crap are going to lose a fortune!

In reply to by nmewn

blindfaith lester1 Thu, 05/24/2018 - 08:33 Permalink

 

Lets not forget that they were allowed to walk up to The FED window and get all the money they wanted when the US homeowner got shit...thanks Obama.

Also don't forget that is shit bank, Deutsche Bank, gave loans to Hedge funds to buy those US homes in trouble but would not give a homeowner any break whatsoever.

 

Home the all become homeless

In reply to by lester1

zvzzt lester1 Thu, 05/24/2018 - 08:40 Permalink

Indeed, unfortunately they are going to drag a few (innocents?) along with them... A serious house cleaning is coming. Big question is, are we coming out as ultra-communist or are we (finally) heading back to the real capitalism/free-market/libertarian economics of the previous 200+ years? A bit rhetorical of course, since we all know the answer, but still: there is (a tiny bit) of hope. 

 

In reply to by lester1

NidStyles Thu, 05/24/2018 - 08:10 Permalink

Another engineered wealth destruction. Looks like the globalists are going full tilt knowing what’s in store for them. 

LOL Follow your own rules.

MsCreant Thu, 05/24/2018 - 08:14 Permalink

This job will be automated out of existence. A computer can steal better than a human. No worries about icy roads, only how to interpret headlines.

NoPension Thu, 05/24/2018 - 08:31 Permalink

What does a modern "banker " do, that a machine can't do better, faster and cheaper?

 ...same for lawyers, accountants, etc.

Once the " information" and rules are computerized...Lookout below.

gaoptimize Thu, 05/24/2018 - 08:57 Permalink

Merkel probably offered up, or drew the short straw, for Deutsche Bank to be the excuse for the next round of banker bail-outs and essentially free money to the well connected.  It is this kind of thing that props up precious metals and bitcoin.