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Big purge coming at Deutsche Bank?

Forget Morgan Stanley (for a moment), is Deutsche going to be next in line for something unpleasant? Earlier this week, the German bank announced plans to expand its business and private clients division and to eliminate 1,100 jobs in the back office. But it has been silent over headcount in the corporate and investment bank.

This is strange given that Deutsche’s corporate and investment bank is in a challenging place. According to analysis by Citigroup this week, Deutsche’s investment banking unit is leveraged 69 times, far more than the likes of Morgan Stanley and Goldman, and more than UBS at 66 times and Credit Suisse at 62 times.

With Deutsche shares off nearly 60% this week, de-leveraging looks inevitable. In the process, Deutsche is likely to get rid of additional trading and trade support staff. So far, headcount cuts in the corporate and investment bank have been relatively minimal. Headcount peaked at 17,215 in 3Q07 and by 2Q08 it was down only 10%.

Back in April, chief financial officer Anthony Di Iorio said there were no plans for ‘large scale redundancies’. That seems likely to change.

Comments (4)

Comments
  1. Interesting… But this 69x is on the Corp and Investment Bank, taking into acount the rest of the bank as well, the leverage ratio is much lower. DB has a Tier I ratio of around 10%, whereas French banks -which are supposed to be in a better shape- have a ratio of around 5.5%.

    The question is – will DB be able to survive this crisis without getting bailed out by sovereign money?

    Re: heacount, they were some redundancies in Q3, and the rumour has it that a futher 10-15% will be seen within Q4…

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  2. what deutsche bank needs to do is removed AVP and VP level staff without qualifications i.e. no degrees or professional qualifications. I know of a number of people who are school leavers there and earning high wages. fire the dead wood.

  3. What i dont understand is that deutsche is apparently also hiring the selectively at moment. If that is to be believed of course.

  4. I sincerely hope DB eventually get round to a mass cull of the weak performers. There are far too many mediocre, dead-wood people here, across front, middle and back. I’m hoping they’ve been few layoffs so far just so they can finally do it just before bonuses, to squeeze the most out of them and then not pay them, and have our per capita bonus pool maximised. There is immense frustration at DB right now that not enough people have been laid off, whilst our revenues are down about 60%, which only means one thing for our bonuses.

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