Deutsche Bank set itself for a major overhaul as it announced shedding of 35,000 jobs and a major winding down in Latin America and Scandinavia as part of its ‘Strategy 2020’, it said on Thursday.
The bank announced plans to streamline businesses after it reported a net loss of $6.6 billion (EUR 6 billion) for the third quarter of 2015.
In April, the bank had announced plans to revamp itself and set new targets for 2018 and 2020 to lower operation costs, modernise technology and capitalise itself. Its reputation had taken a dip in the last few years given its poor performance and scandals.
The company had to shell out $2.5 billion in fines in the LIBOR scandal and had failed the US Federal Reserve’s ‘stress tests’ to assess quality of banks earlier in March. The bank was also at risk of failing stress tests conducted by European Central Bank.
Under the new plan, the bank would close its operations in 10 countries—Argentina, Chile, Mexico, Peru, Uruguay, Denmark, Finland, Norway, Malta and New Zealand, move trading activities in Brazil to global and regional hubs and further centralise booking locations in global and regional hubs as part of the new Global Markets and Corporate & Investment Banking (CIB) structure.
The bank also announced plans to cut 9,000 full-time jobs and 6,000 external contractor positions in its Global Technology & Operations infrastructure function in addition to plans to dispose of assets with a total cost base of $4.4 billion (EUR 4 billion) and 20,000 more full-time jobs over the next 24 months. At the end of 2014, the total number of full-time employees was 98,138.
In addition to job cuts, the plan released by newly appointed co-CEO John Cryan also involved suspending dividend payments for 2015 and 2016. The last time the German bank had suspended payments was during the global meltdown in 2008-09.
While the plan seems good on paper pending investigations and fines on the bank may leave a big dent on balance sheet and further revision of targets.