Deutsche Bank Plans to Cut Up to Half of Global Equity Jobs

Deutsche Bank AG is preparing to start eliminating hundreds of jobs in its global equity division, the first major cuts in a broader restructuring after the collapse of merger talks with rival Commerzbank AG.

The German lender is finalizing a plan to cuts jobs in equities trading and research, as well as in derivatives trading, the people said, asking not to be identified as the matter is private. The bank will likely start informing staff — including in the U.S. and Asia — as early as next week, they said.

The cuts mark Chief Executive Officer Christian Sewing's most decisive steps since breaking off merger talks with Commerzbank in April and add to the 25% reduction in equities-trading headcount he enacted after taking over more last year. The bank has about 1,000 employees in equities, not counting research and support roles, and may cut as many as 20,000 jobs over the coming year and beyond across the firm, the Wall Street Journal reported on Friday.

Shares Rise

A spokesman for Deutsche Bank declined to comment. The shares rose as much as 4.9% on Friday, after the lender had passed the Federal Reserves annual stress tests, and were trading 3.6% higher as of 4:58 p.m. in Frankfurt.

Sewing told investors late last month that he's targeting a round of "tough cutbacks" to the investment banking division after a long series of previous turnaround plans failed to deliver. In addition to deep cuts to the equities business, the bank is also working on a restructuring plan that will see the bank create a non-core unit designed to house unwanted assets for wind-down or sale, people familiar with the matter have said earlier.

Fifth Turnaround

Sewing is working on Deutsche Bank's fifth turnaround since 2015 as the banks seeks to boost profitability, revive its slumping share price and adjust its business model with interest rates in Europe lower for longer. As part of the discussions about the bank's future, it also held brief and informal talks with UBS AG about a tie-up earlier this year.

The new round of planned cuts has already precipitated a stream of departures from the investment bank, with a further wave of senior executives likely soon. Division head Garth Ritchie may soon be replaced in a shakeup that will see Sewing take control of the investment bank on an interim basis while the bank searches for a permanent successor, people familiar with the matter have said. Sewing is also considering replacing Chief Financial Officer James von Moltke and compliance head Sylvie Matherat, the people said.

Sewing, who took over in April last year, had repeatedly reaffirmed Deutsche Bank's commitment to its presence in the U.S. and Asia. The lender earlier this month told Bloomberg it's seeking to expand its U.S. structured finance business.

The bank has been focusing its investment banking activities outside Europe on services that directly cater to large European businesses or that are clearly profitable. Sewing at the AGM highlighted transaction banking, corporate finance, foreign exchange trading, credit trading and US commercial real estate. He didn't mention equities and interest rates.