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Deutsche Bank's Restructuring Plans in Germany on Track
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Deutsche Bank AG (DB - Free Report) disclosed detailed restructuring moves on Thursday for revamping the commercial and private banking business in Germany. The company’s plans which form broader part of its Strategy 2020 announced last year include branch consolidation, job cuts, and opening of advisory centers.
The German banking giant will eliminate around 3,000 employees in Germany by 2018, of which 2,500 positions are tied with the bank’s Private and Commercial Clients unit. While the latest job cut plan will achieve 90% of the bank’s head count reduction target, Deutsche Bank is currently in discussion with employee representatives about further job reductions in other German business divisions.
Deutsche Bank stated that in order to avoid compulsory redundancies, it will arrange training programs and redeploy employees to vacant positions within the group. Also, the bank will assist the affected employees in finding new jobs outside the organization.
With continued focus on modernization and digitization, the bank intends to consolidate 723 branches into 535 larger offices in 2017, reflecting a 26% decrease. Also, by 2020, Deutsche Bank plans investments of €750 million including €200 million this year in digital products and advisory services.
Further, the bank will open seven advisory centers in 2017, providing banking professionals with modern technology platforms including chat, video and telephone for client advisory purposes. Additionally, Deutsche Bank intends to offer better services to mid-sized corporate clients by enhancing the service support ratio. Notably, in this regard the bank plans to create 140 new positions.
Christian Sewing, head of Deutsche Bank’s Private, Wealth and Commercial Clients unit noted, “Our customers want a modern, customer-friendly Deutsche Bank. In addition, we are responding the challenges created by the low interest rate environment, increased regulations and, above all, a change in customer behaviour. If we are to continue to meet the needs of our customers in future, we will have to apply the right business measures.”
Bottom Line
Chief Executive Officer John Cryan, who succeeded co-CEO Anshu Jain last June, inherited the task of executing the bank’s Strategy 2020. Notably, Strategy 2020, which was unveiled in Apr 2015 includes several measures like initiatives to reposition Investment Banking, reorganize retail business and trim the geographic footprint to achieve net savings of €1-1.5 billion by 2018.
While, Cryan is expediting efforts to revamp the bank, the litigation headwinds are not likely to ease soon as the bank continues to struggle with numerous lawsuits and regulatory proceedings.
Deutsche Bank currently carries a Zacks Rank #5 (Strong Sell). Some favorably placed stocks in the foreign banks include Canadian Imperial Bank of Commerce (CM - Free Report) , DBS Group Holdings Ltd (DBSDY - Free Report) and Bank of Montreal (BMO - Free Report) , each sporting a Zacks Rank #1 (Strong Buy).
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Deutsche Bank's Restructuring Plans in Germany on Track
Deutsche Bank AG (DB - Free Report) disclosed detailed restructuring moves on Thursday for revamping the commercial and private banking business in Germany. The company’s plans which form broader part of its Strategy 2020 announced last year include branch consolidation, job cuts, and opening of advisory centers.
The German banking giant will eliminate around 3,000 employees in Germany by 2018, of which 2,500 positions are tied with the bank’s Private and Commercial Clients unit. While the latest job cut plan will achieve 90% of the bank’s head count reduction target, Deutsche Bank is currently in discussion with employee representatives about further job reductions in other German business divisions.
Deutsche Bank stated that in order to avoid compulsory redundancies, it will arrange training programs and redeploy employees to vacant positions within the group. Also, the bank will assist the affected employees in finding new jobs outside the organization.
With continued focus on modernization and digitization, the bank intends to consolidate 723 branches into 535 larger offices in 2017, reflecting a 26% decrease. Also, by 2020, Deutsche Bank plans investments of €750 million including €200 million this year in digital products and advisory services.
Further, the bank will open seven advisory centers in 2017, providing banking professionals with modern technology platforms including chat, video and telephone for client advisory purposes. Additionally, Deutsche Bank intends to offer better services to mid-sized corporate clients by enhancing the service support ratio. Notably, in this regard the bank plans to create 140 new positions.
Christian Sewing, head of Deutsche Bank’s Private, Wealth and Commercial Clients unit noted, “Our customers want a modern, customer-friendly Deutsche Bank. In addition, we are responding the challenges created by the low interest rate environment, increased regulations and, above all, a change in customer behaviour. If we are to continue to meet the needs of our customers in future, we will have to apply the right business measures.”
Bottom Line
Chief Executive Officer John Cryan, who succeeded co-CEO Anshu Jain last June, inherited the task of executing the bank’s Strategy 2020. Notably, Strategy 2020, which was unveiled in Apr 2015 includes several measures like initiatives to reposition Investment Banking, reorganize retail business and trim the geographic footprint to achieve net savings of €1-1.5 billion by 2018.
While, Cryan is expediting efforts to revamp the bank, the litigation headwinds are not likely to ease soon as the bank continues to struggle with numerous lawsuits and regulatory proceedings.
Deutsche Bank currently carries a Zacks Rank #5 (Strong Sell). Some favorably placed stocks in the foreign banks include Canadian Imperial Bank of Commerce (CM - Free Report) , DBS Group Holdings Ltd (DBSDY - Free Report) and Bank of Montreal (BMO - Free Report) , each sporting a Zacks Rank #1 (Strong Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>