Deutsche Bank is reported to be planning to remove more than 100 posts among its senior private wealth and retail bankers in a continuing programme aimed at driving down costs at the German bank.
Deutsche Bank’s latest cost-cutting effort has led the German bank to cut 111 senior managers in its private wealth and retail sections, according to the Financial Times. The units in question fall under Deutsche Bank’s private banking division, with the employees impacted being mostly global managing directors and directors, who are highly-paid.
This move comes as the bank tries to meet its cost-cutting goals for the next year, which includes slashing the private wealth and retail unit’s cost-to-income ratio down to between 60% to 65% in 2025. If so, this would be a significant reduction from about 80% in 2023, as well as 77% in the first nine months of this year.
The bank has also revealed that revenue growth across all its divisions will be required in order to meet this goal.
Deutsche Bank’s private banking division has faced a wave of criticism in recent years for underperformance, IT issues and not earning its cost of capital.
Currently, the division accounts for only 23% of overall profits, although it does contribute around 31% of the bank’s revenue.
The lacklustre performance has led to the axing of two former heads of private banking, due to issues regarding profitability and cost targets.
However, investors are hopeful that things may change under the leadership of the current head of private banking, Claudio de Sanctis. The latter has already emphasised his commitment to meeting cost-income goals and revamping the private banking division.
He has already merged several levels of management and shut down 300 German branches in an attempt to cut costs. The number of front-office employees has also been reduced, while spending on outside consultants has been heavily trimmed.
However, de Sanctis has also revealed that more wealth management employees will hired next year.
Deutsche Bank invests in India growth plans
Deutsche Bank has invested about €571m in its branch operations in India, in an attempt to fuel the bank’s growth in the country, especially in areas like sustainable finance and digital transformation.
Alexander von zur Muehlen, Deutsche Bank chief executive officer (CEO) of Asia Pacific, Europe, Middle East & Africa (EMEA) and Germany, said in a press release on the bank’s website: “India is well positioned to benefit substantially from many of today’s most important trends – reshaped supply chains, digitisation of industries, increased geopolitical frictions, global demographic changes, among others. Consequently, we see enormous potential for our deeply integrated, well diversified business in India.”
Kaushik Shaparia, the CEO of Deutsche Bank Group, India, also said in the press release: “This incremental capital into our India franchise is a strong validation of confidence in our business model and potential in this country. As a Global Hausbank, we continue to see opportunities for us to work ever more closely with our clients, to support them with best-in-class services and advice.”
