German banking giant Deutsche Bank AG (DB - Free Report) is aimed at nearly 6,000 layoffs at the bank’s newly formed unit, by the end of 2022. This is likely part of the planned integration of the bank’s retail unit — Postbank — Bloomberg reported.
Per the source, negotiations with the bank’s labor representatives will decide the final count of layoffs. Further, more than 1,000 job cuts will take place annually through a voluntary program and normal retrenchment.
Earlier in October 2017, Deutsche Bank and Postbank announced the realignment of their business with private and commercial clients, in which more than 20 million clients and €325 billion 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 two different brands will be maintained.
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.
Notably, the planned layoffs at the retail unit will be over Deutsche Bank’s CEO John Cryan’s target set in late 2015, to retrench 9,000 employees at the bank by the end of 2020.
The past few years have been tough for this 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.
Last November, Cryan announced his plans to reduce thousands of jobs by rolling out technology in the bank’s operations. Further, the CEO 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, will help counter the declining revenues. The bank had reported about 19% fall in revenues in its fourth-quarter 2017 results due to low client activity levels and interest rates, along with subdued volatility. Also, the quarter was particularly affected by strategic business disposals.
Notably, in December 2017, Deutsche Bank started a voluntary program with 1,000 layoffs. Employees are likely to give their acceptance to the terms of the plan by October this year.
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 declined 3.9% over the last six months on the NYSE, underperforming 4.7% growth recorded by the industry. At present, Deutsche Bank carries a Zacks Rank #5 (Strong Sell).
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 27%. It carries a Zacks Rank of 2 (Buy).
ING Group, N.V. (ING - Free Report) has been witnessing upward estimate revisions for the past two months. Additionally, the stock moved up more than 14% over the past year. It currently carries a Zacks Rank of 2.
Canadian Imperial Bank of Commerce (CM - Free Report) has been witnessing upward estimate revisions for the past month. Also, the company’s shares have risen nearly 4% in a year’s time. It also holds a Zacks Rank of 2, at present.
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