So much for the end of layoffs at Deutsche Bank. When Deutsche CEO John Cryan said yesterday that, “from today” there will be no more workforce cuts, what he really meant was, "from next week". The Wall Street Journal reports that Deutsche is planning to layoff 17% of its equities staff (200 people) and 7% of its fixed income staff (100 people), starting next Monday. Insiders say Tuesday is actually the big day, but one top Deutsche equities professional has quit already.
That man is Jonathan ("Jonny") Potter, Deutsche's head of European sales. His departure preceded the payment of Deutsche's miserable bonuses for 2016 and is said by insiders to reflect his frustration with the business (although we haven't confirmed this with Potter himself). Potter had worked for Deutsche for years and was promoted to global head of equity sales in 2015.
Deutsche insiders say next week's layoffs are expected to disproportionately impact the bank's senior sales staff and the bank is planning to restructure its markets business so that sales staff will in future report to trading heads. Unconfirmed rumours also suggest that Dixit Joshi, head of Deutsche's institutional client group, is moving to a treasury role. Deutsche declined to comment.
With 100 people going from the fixed income sales and trading business, the expectation is that the rates business in particular will be trimmed. Deutsche said yesterday that its rates business was flat year-on-year in the fourth quarter even as other banks reported substantial revenue increases. This might have something to do with the strength of Deutsche's rates business in 2015 - when revenues allegedly rose from €450m to €900m, making comparables tough. Deutsche's rates business allegedly has a high cost base, however, meaning that the revenue target is set around €1bn and big year-on-year increases are required to sustain the business at its current size.
Deutsche announced plans to cut 9,000 jobs across the bank last year.
Potter isn't the only Deutsche equities professional to leave ahead of time. Tom Leake, Deutsche's head of global equity structuring, quit last year and has now turned up at Goldman Sachs. London recruiters say a handful of equities and fixed income staff have also been put at risk before next week's big day, but this is because they're on holiday next week. Thoughtful.