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Deutsche Bank to Adopt Hybrid Work Model: Others to Follow?

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With the coronavirus outbreak, several companies had taken measures like offering work from home facilities to safeguard employees, without having to compromise on the services provided to clients.

However, of late, many firms are cutting costs by reducing employee strength in offices, thereby, resulting in lesser branches.

Per a Bloomberg article, Deutsche Bank’s (DB - Free Report) CEO Christian Sewing is working on a new “hybrid model” that would include policies on how employees can divide work between the office and working remotely.

Citing person familiar with the matter, the article reported that employees will have a binding agreement on how many days per week they want to work away from the office. The move is expected to help the German lender save costs such as office space rent and other related expenses.

Also, the bank’s CFO James von Moltke finds this as the right opportunity to reduce €1.7 billion, which the company had expected to incur every year on rent and furniture. It has already taken a step in that direction by giving up floors on the Zurich’s most expensive building. Also, it is mulling to reduce office space in New York by a third.

Will Others Follow Suit?

The article reported that lenders, including Mizuho Financial Group (MFG - Free Report) and Fifth Third Bancorp (FITB - Free Report) , are putting employees on work from home, in order to control costs. These companies, along with Deutsche Bank are satisfied with the performance of their staffs who have been working remotely since the start of the pandemic.

However, executives of some companies such as JPMorgan Chase (JPM - Free Report) , UBS Group and BlackRock have contradicting views. They feel that the productively is being compromised and could even worsen if employees are allowed to work from homes for a very long period.

Some companies are yet indecisive about the path they will follow. Some of them have asked employees to continue working remotely until at least 2021, while others have already asked them to return office, though in partial capacity.

Our Viewpoint

Efforts to reduce costs with this move might help Deutsche Bank offset the financial impacts caused by the pandemic to some extent. Also, recently, the bank was in news for planning to close about 20% of branches in Germany.

For Deutsche Bank, which has been incurring losses for the past several quarters, these restructuring efforts are likely to support financials.

Shares of this Zacks Rank #3 (Hold) firm have gained 22.9% over the past six months compared with the industry’s growth of 2.1%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

 

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