Deutsche Cuts Mideast IB Team

Deutsche Bank AG ( DB - Snapshot Report ) is trimming its Dubai workforce in the investment banking section, according to a Reuters report. Moreover, this involves a number of senior level job cuts. The move comes as Deutsche Bank addresses issues emanating from the difficult investment banking environment in the Middle East as well as stringent regulatory norms.

According to the report, in addition to the layoffs at the junior levels, officials delegated with high positions have also been identified for this trimming process. Zulfi Khan, a director in the company’s global markets operations who dealt with United Arab Emirates’ client coverage is departing.

The report also stated that one of the sources gained knowledge regarding Deutsche Bank’s ongoing initiative of reducing around 25% of the total investment banking team in Dubai. Deutsche, however, chose to refrain from making any statements regarding particular layoffs.

Further, its spokesman stated that the news of the 25% job cut is not pertaining to the actual facts. Also, it was added that the company is rather trimming its workforce by around 5% in some areas while expanding its team in other areas.

As a matter of fact, last week, Deutsche Bank announced its restructuring plans, which followed a 100-day evaluation made by the new co-CEOs – Juergen Fitschen and Anshu Jain. Deutsche Bank’s revamp plan involves change in compensation practices, job cuts as well as assets sales. The company intends to lower annual costs by €4.5 billion ($5.8 billion) by 2015 and slash more than 1900 jobs, mainly in the investment banking division.

In addition to Deutsche Bank, Bank of America Corp. ( BAC - Analyst Report ) and Credit Suisse Group ( CS - Snapshot Report ) have also axed jobs in the investment banking segment in the region. This retreat from the investment banking market comes on the heels of the plummeting deal volumes as well as reduced fees.

Hurt by the Eurozone debt crisis, Deutsche Bank experienced trading revenue declines in the past. Apart from a drop in revenues in the second quarter, the weak euro has added to its woes. The company has adopted several strategic initiatives, including the repositioning of its core business and bolstering of its capital levels. Such initiatives augur well going forward for the company.

Given the stressed operating environment, we believe that any significant improvement in its earnings in the upcoming quarters would remain elusive. However, prudent business model changes can improve its efficiency and add to its competitive edge.

Deutsche Bank currently retains a Zacks #4 Rank, which translates into a short-term Sell rating.