EghtesadOnline: Deutsche Bank AG is poised to reach an agreement with labor representatives this week that will pave the way for the German lender to eliminate about 1,000 jobs in its home market as part of Chief Executive Officer John Cryan’s cost cuts announced last year, said people with knowledge of the matter.
The planned job cuts, which need to be signed off by the works council, will mostly affect back-office staff such as in information technology services, said the people, who asked not to be identified because negotiations are private. The Frankfurt-based lender in June struck an agreement with its works council to eliminate about 3,000 full-time positions, including 2,500 jobs at its private and commercial clients business, in a first round of talks.
Cryan, 55, has been struggling to reassure investors that he’s able to boost profitability as concerns about mounting legal costs prompted some clients to pull funds and investors questioned the lender’s financial health. As part of his overhaul announced in October 2015, the CEO is seeking to eliminate 9,000 jobs, or about 9 percent of the global workforce, including some 4,000 positions in Germany, reports Bloomberg.
A representative for Deutsche Bank declined to comment.
Cryan has struggled to reverse a slide in shares that eroded almost half of the company’s market value this year. Deutsche Bank shares touched a record low last month after the U.S. Department of Justice requested $14 billion to settle a probe into the sale of residential mortgage-backed securities, more than twice what the lender has set aside for litigation.
Cryan told Germany’s Bild newspaper last week that he doesn’t plan to raise capital and ruled out government assistance. The stock rebounded on Friday after Agence France Presse reported that the lender was nearing a settlement of $5.4 billion with the DOJ.
Cryan and other top German executives are scheduled to travel to Washington this week as business leaders and central bankers gather for the International Monetary Fund and World Bank meetings, according to the people. The managers may use the trip to also continue negotiations with the Justice Department to settle the investigation, they said.
Cryan has already said that 2016 will be the peak restructuring year and that the lender may fail to be profitable after posting the first annual loss since 2008 last year. The CEO signaled in July that the bank may have to deepen cost cuts after second-quarter profit was almost wiped out by a slump in trading and costs tied to his overhaul.
Deutsche Bank is scheduled to report third-quarter earnings later this month.