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Deutsche Bank to Layoff 1,000 Jobs for Postbank Integration
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German banking giant Deutsche Bank AG (DB - Free Report) is aimed at nearly 1,000 layoffs. This is likely part of the planned integration of the bank’s retail unit — Postbank — Reuters reported. Per the spokeswoman, employees were given prior information earlier this week about the job cut which will be part of a voluntary program. Notably, staffs are likely to give their acceptance to the terms of the plan by October 2018.
Therefore, as part of this integration, there will be nearly 250 layoffs at Deutsche Bank, while Postbank unit will retrench 750 jobs. Per the source, two thirds of the jobs cut is expected through early retirement and the remaining through severance pay.
Background
Earlier in October 2017, Deutsche Bank and Postbank announced the realignment of their business with private and commercial clients, in which over 20 million clients and 325 billion euros in client business volume will create a single entity. By the end of second-quarter 2018, a single legal entity will be formed after the completion of the merger, but will maintain two different brands.
Post integration, considerable synergies will be reaped, including €900 million annually, by 2022. Notably, €1.9 billion will be spent in restructuring expenses and other investments, mainly in technology. Additionally, the cost-income ratio for this business is anticipated to be lowered to below 65% by 2022.
The past few years have been tough for Deutsche Bank due to numerous litigations and regulatory proceedings in and outside Germany, unstable European economy at the time and the lender’s involvement in scandals. These factors adversely impacted profits, bringing the bank on the edge of a great fall.
Earlier in November 2017, Deutsche Bank’s CEO John Cryan revealed his plans to reduce thousands of jobs by rolling out technology in the bank’s operations. Further, Cryan foresees scope for branch closures as he feels that customers’ preferences are shifting to digital banking, as they rarely turn up physically at the branches.
These restructuring initiatives are seen as an opportunity to manage costs which, in turn, would help counter the falling revenues. The bank had reported about 10% decline in revenues in its third-quarter results due to low level of volatility and consequently lower trading income, especially in the areas of fixed income and currencies.
Bottom Line
Though Deutsche Bank’s restructuring efforts look encouraging, it is really difficult to determine how much the bank will gain, considering the prevailing headwinds.
Shares of Deutsche Bank have gained just 6.3% in a year’s time on the NYSE, underperforming the 20.9% rally for the industry it belongs to. At present, Deutsche Bank carries a Zacks Rank #3 (Hold).
KB Financial Group Inc (KB - Free Report) has been witnessing upward estimate revisions for the past 30 days. In six months’ time, the company’s share price has been up more than 20%. It carries a Zacks Rank of 2 (Buy).
ING Group, N.V. (ING - Free Report) has been witnessing upward estimate revisions for the past month. Additionally, the stock moved up more than 10% over the past six months. It currently carries a Zacks Rank of 2.
Shinhan Financial Group Co Ltd (SHG - Free Report) has been witnessing upward estimate revisions for the past two months. Also, the company’s shares have risen nearly 9.4% in six months’ time. It also holds a Zacks Rank of 2, at present.
Zacks’ Best Private Investment Ideas
While we are happy to share many articles like this on the website, our best recommendations and most in-depth research are not available to the public.
Starting today, for the next month, you can follow all Zacks' private buys and sells in real time. Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors.
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Deutsche Bank to Layoff 1,000 Jobs for Postbank Integration
German banking giant Deutsche Bank AG (DB - Free Report) is aimed at nearly 1,000 layoffs. This is likely part of the planned integration of the bank’s retail unit — Postbank — Reuters reported. Per the spokeswoman, employees were given prior information earlier this week about the job cut which will be part of a voluntary program. Notably, staffs are likely to give their acceptance to the terms of the plan by October 2018.
Therefore, as part of this integration, there will be nearly 250 layoffs at Deutsche Bank, while Postbank unit will retrench 750 jobs. Per the source, two thirds of the jobs cut is expected through early retirement and the remaining through severance pay.
Background
Earlier in October 2017, Deutsche Bank and Postbank announced the realignment of their business with private and commercial clients, in which over 20 million clients and 325 billion euros in client business volume will create a single entity. By the end of second-quarter 2018, a single legal entity will be formed after the completion of the merger, but will maintain two different brands.
Post integration, considerable synergies will be reaped, including €900 million annually, by 2022. Notably, €1.9 billion will be spent in restructuring expenses and other investments, mainly in technology. Additionally, the cost-income ratio for this business is anticipated to be lowered to below 65% by 2022.
The past few years have been tough for Deutsche Bank due to numerous litigations and regulatory proceedings in and outside Germany, unstable European economy at the time and the lender’s involvement in scandals. These factors adversely impacted profits, bringing the bank on the edge of a great fall.
Earlier in November 2017, Deutsche Bank’s CEO John Cryan revealed his plans to reduce thousands of jobs by rolling out technology in the bank’s operations. Further, Cryan foresees scope for branch closures as he feels that customers’ preferences are shifting to digital banking, as they rarely turn up physically at the branches.
These restructuring initiatives are seen as an opportunity to manage costs which, in turn, would help counter the falling revenues. The bank had reported about 10% decline in revenues in its third-quarter results due to low level of volatility and consequently lower trading income, especially in the areas of fixed income and currencies.
Bottom Line
Though Deutsche Bank’s restructuring efforts look encouraging, it is really difficult to determine how much the bank will gain, considering the prevailing headwinds.
Shares of Deutsche Bank have gained just 6.3% in a year’s time on the NYSE, underperforming the 20.9% rally for the industry it belongs to. At present, Deutsche Bank carries a Zacks Rank #3 (Hold).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Foreign Stocks to Consider
KB Financial Group Inc (KB - Free Report) has been witnessing upward estimate revisions for the past 30 days. In six months’ time, the company’s share price has been up more than 20%. It carries a Zacks Rank of 2 (Buy).
ING Group, N.V. (ING - Free Report) has been witnessing upward estimate revisions for the past month. Additionally, the stock moved up more than 10% over the past six months. It currently carries a Zacks Rank of 2.
Shinhan Financial Group Co Ltd (SHG - Free Report) has been witnessing upward estimate revisions for the past two months. Also, the company’s shares have risen nearly 9.4% in six months’ time. It also holds a Zacks Rank of 2, at present.
Zacks’ Best Private Investment Ideas
While we are happy to share many articles like this on the website, our best recommendations and most in-depth research are not available to the public.
Starting today, for the next month, you can follow all Zacks' private buys and sells in real time. Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors.
Click here for Zacks' private trades >>