Deutsche Bank to cut 3,500 jobs

By CNN Newsource

Published February 1, 2024 1:25 AM

By Hanna Ziady, CNN

London (CNN) — Deutsche Bank is cutting 3,500 jobs as it pushes ahead with a plan to reduce costs by €2.5 billion ($2.7 billion) by 2025.

Germany’s biggest lender said Thursday that it had made progress towards the target but still had to find savings of €1.6 billion ($1.7 billion), some of which would be driven by “simplified workflows and automation.” Most of the jobs will be lost in back office functions, it added in a statement.

The cuts amount to about 4% of the company’s global workforce.

Deutsche Bank also reported that 2023 profit before tax rose 2% on the previous year to €5.7 billion ($6.1 billion) — its highest level in 16 years. But net profit fell 14% to €4.9 billion ($5.3 billion) as its tax bill rose.

“We have… delivered growth well ahead of target and maintained our focus on cost discipline while investing in key areas,” CEO Christian Sewing said.

The bank said it would return €1.6 billion ($1.7 billion) to shareholders in the first half via dividends and share buybacks.

Deutsche Bank (DB) is just the latest in a string of lenders to announce layoffs in recent months, as banks look to reduce costs and boost profits.

Citibank (C) said earlier in January that it would cut 20,000 jobs over the next two years, saving $2.5 billion in the long term. UBS (UBS), meanwhile, is shedding 3,000 jobs in Switzerland alone as it absorbs Credit Suisse, with more cuts anticipated elsewhere.

In the United Kingdom, Barclays (BCS), Lloyds and Metro Bank all announced layoffs in November.

Several of the banks have cited increased automation as a reason for reducing staff numbers, as worries grow over the impact that advances in generative artificial intelligence could have on jobs. Lloyds, for example, said it was ditching certain roles but hiring for data and technology positions.

But they may also be bracing for a tougher business environment as the impact of elevated interest rates works through the economy, leading to growing losses on loans, and in anticipation of lower rates to come, which may eat into banks’ margins.

Deutsche Bank said it had increased provisions for potential bad debts by €300 million to €1.5 billion ($1.6 billion) in 2023, which it said reflected “the continued challenging impact of macro-economic and interest rate conditions.”

On the other hand, as interest rates come down, lending becomes less profitable for banks.

This article has been updated with additional information and background.