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Deutsche Bank poised to announce huge job losses on Monday

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Deutsche Bank
LONDON, ENGLAND - SEPTEMBER 05: A general view of Deutsche Bank on September 5, 2011 in London, England. Shares at Deutsche Bank fell by nearly 9 per cent today after news emerged that it was one of several banks currently being examined by the Serious Fraud Office, to determine whether financial institutions fraudulently misrepresented asset backed securities deals to clients in the UK. (Photo by Dan Kitwood/Getty Images)

Deutsche Bank is poised to announce as many 20,000 job losses on Monday, according to reports, so long as its restructuring plan is adopted during meetings over the weekend.

Read more: Deutsche Bank restructuring to cost up to €5.6bn

Chief executive Christopher Sewing’s turnaround plans for Germany’s biggest lender are set to come to a head over a crunch weekend, Bloomberg reported.

Sewing is pushing through the plans in an attempt to halt the multi-year decline of Deutsche’s investment banking arm and its collapsing share price.

Over the last five years shares have fallen over 70 per cent. Shares that were worth almost €90 before the financial crisis are worth around €7 today.

Deutsche has struggled to recover from the financial crisis. It has not coped well with stricter banking regulations and its investment arm has consistently underperformed competitors.

It has also faced multiple scandals, including a case concerning the alleged rigging of Euribor interest rates, which has now seen a Deutsche executive acquitted.

It was reported yesterday by the Sueddeutsche Zeitung that Deutsche plans to create a “corporate bank” unit which will include its transaction banking operations. 

The Financial Times reported in June that Deutsche will create a “bad bank” to hold up to $50bn (£40bn) of mainly long-dated assets.

Sewing’s overhaul is expected to move the bank firmly away from investment activities and towards operations such as transaction banking, which addresses the needs of businesses.

Russ Mould, AJ Bell investment director, questioned how the bad bank’s assets could “be worth anything like” $50bn. He said Deutsche has a market capitalisation of €14.5bn (£13bn) and €54 billion in financial assets.

Bell said: “Investors are likely to remain sceptical of the restructuring plan given how the numbers don’t seem to add up.” 

He also pointed to “the ultimate failure” of cost-cutting initiatives in 2012 and 2015 “ and the losses suffered by those who backed the 2014 and 2017 capital raisings”.

Read more: Deutsche exec acquitted in Euribor trial

Deutsche Bank has been contacted for comment.