Germany’s Deutsche Bank reveals plans to axe 3,500 jobs
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Germany-based Deutsche Bank recently unveiled plans to cut 3,500 jobs as part of its ongoing efforts to boost operational efficiency within the company.
The bank reported that its net profits have dropped by 14%, sinking to €4.9 billion. The bank then developed and engrossed in a €2.5 billion operational efficiency program meant to help improve its figures.
According to the bank, at the end of 2023, the savings realized or expected from completed efficiency measures reached 1.3 billion EUR. That left around 900 million EUR in savings realized to date, which includes approximately €350 million in 2023.
The bank has high hopes for the new program, expecting that the remaining €1.6 billion will be driven by special measures relating to technology efficiency and infrastructure. This includes operating model improvements, app de-commissioning, redesign of front-to-back process, simplifying workflows and automation, and generally optimizing the bank’s platform in its home nation of Germany.
The bank concluded that the measures will reduce its workforce by around 3,500 roles, primarily in non-client-facing back office areas.
Not the only bank to announce massive layoffs
Deutsche Bank’s decision came only days after the UK-based Lloyds Banking Group announced that it would cut 1,600 jobs in its branch network. Of course, Lloyds’ reasons are different, as the bank has found that the majority of its users have stopped going to physical branches, and even its mobile bank service — banking vans that travel through towns to offer face-to-face banking — has been losing customers.
In the UK, digital banking is becoming more and more prominent with every passing year, and while this has brought a series of problems — such as a rise in online fraud cases — it is still a sign of rapid development in the payments sector.
For Deutsche Bank, however, the situation is different. The bank’s total workforce numbers 90,000 employees, so with the net profits sinking, it has decided to cut costs where it can afford to do so.
New developments for Deutsche Bank
Of course, the bank has already announced plans to cut jobs in the past. However, this is the first time that it has put a number on the layoffs, opting to eliminate 4% of the total workforce in weeks and months to come.
Apart from that, the bank also intends to conduct share buyback and dividends in the first half of the new year, which will total around €1.6 billion.
The announcement came at an interesting time for the bank, as its retail unit recently overtook the investment bank as the main revenue driver in 2023. This officially overturned the latter’s pole position in the past three years, simply because the retail division got to benefit from the elevated interest rates.
