Alas, Deutsche Bank now stands as one of the latest lending giants that have released plans for a sweeping layoff. The banking giant is heavily considering cutting a third of its retail banking staff. This was reported on Tuesday by the Reuters news outlet.
Massive Need For Deutsche Bank To Cut Operational Costs
This workforce reduction will be made in Bonn and Frankfurt, two of its major retail banking hubs. In the report, these mass layoffs have been outlined as a way for the bank to cut down on operation costs, much like HSBC is doing as well.
Karl von Rohr, a member of the Board of Deutsche Bank, explained that the only way for the German private customer business to become both sustainable and profitable is by way of a significant reduction in costs. Further measures need to be taken, von Rohr stated, in order to achieve this.
Deutsche Bank made its intent to enact this crushing move shortly after a similar intention was announced by HSBC. HSBC, in particular, will completely cease its retail banking operations within the US. The banking giant, Headquartered in London, is reducing its operation costs by a massive degree through a major restructuring. Sadly, this restructuring will cost the jobs of 35,000 individuals across the globe.
Five Years Of Going Red
The rumours are that Deutsche Bank is planning to complete these job cuts by the end of 2022, but nothing has been official confirmed as of now. The unit most affected by this massive job cut will the Postbank retail banking arm. The hope is that the bank will become profitable the moment its operating costs have been sufficiently reduced.
Throughout the past five years, Deutsche Bank had failed to turn any form of profit. The COVID-19 pandemic had also severely affected its business, heavily impacting its moneymaking abilities. For 2020’s first quarter, the bank had reported a €43 million loss. Even so, the initial street estimates for that quarter was even lower, so they successfully failed to a lesser degree.
Many Banking Giants Doing Similar Cuts
The German lending giant had also sold its retail banking IT operations quite recently. Its operations, going by Postbank Systems, was sold off to TCS, an Indian software outsourcing giant. The most noteworthy aspect about this acquisition is the price: An entire €1.
The banking industry, both retail and investment banking, has seen many of its big players starting to enact job cuts. ABN Amro, based in Amsterdam, decided to cut about 15% of its workforce, with Societe General planning to cut out 650 jobs, as well.