Picture: MARTIN RHODES
Picture: MARTIN RHODES

Deutsche Bank will cut equities jobs by a quarter and reduce overall positions by at least 7,000 as CEO Christian Sewing seeks to slash costs and boost profitability at the investment bank.

The reductions will take the number of jobs at the Frankfurt-based lender to well below 90,000 and lead to a restructuring charge of as much as €800m this year, it said on Thursday.

Deutsche Bank’s SA chief, Muneer Ismail, confirmed on Wednesday night that the global cuts would affect its South African advisory and equities business, but he did not answer specific questions on job losses.

"We are reviewing our advisory and equities footprint in SA with a view to scaling back our activities in these areas‚” he said late on Wednesday night. “This is part of a wider review of our businesses globally.”

Ismail said that the “debt capital markets‚ fixed income and treasury products franchise” in the country would not be affected.

“We remain committed to our South African clients and our on-the-ground presence in SA‚" he said.

The bank also plans to reduce funds at risk and seek to further drive down expenses.

Sewing is accelerating a push to refocus the lender on its European home market and reverse a two-decade effort to compete head-to-head with the large Wall Street firms that dominate volatile securities trading.

The future of the investment bank and failure of predecessor John Cryan to cut costs and restructure fast enough were key factors in last month’s management shakeup.

Global equities has been one of the new CEO’s first targets.

“The equities business is a very sensible area to focus the cuts on seeing as they haven’t been achieving the return on capital they want there,” Neil Smith, an analyst at Bankhaus Lampe who has a buy recommendation on Deutsche Bank shares, said by phone from Dusseldorf. “The key issue for Sewing to focus on immediately is cost, where Deutsche Bank disappointed last year.

The bank is considering 10,000 job cuts, people with knowledge of the matter said on Wednesday.

Precise forecast

The new target for job cuts is the first precise forecast given by Sewing.

Cryan in late 2015 foresaw 9,000 job cuts by 2020. Group headcount actually fell by about 1,500 during his tenure.

The bank also said on Thursday that it would reduce its leverage exposure in the corporate and investment bank by more than €100bn as part of the overhaul and is targeting about a 10% post-tax return on tangible equity from 2021 onwards.

There has been increasing evidence in recent weeks that the pace of job cuts is picking up, with the investment bank bearing the brunt.

Deutsche Bank has said it will move to smaller premises in New York and will close its Houston office entirely due to a withdrawal from advisory services for the oil and gas sector.

Chief financial officer James von Moltke hinted last month that the new CEO’s cost-cutting measures to a large extent were a continuation of plans already being developed under Cryan.

The bank foresees adjusted costs not exceeding €23bn this year, with that figure falling to €22bn in 2019.

Bloomberg and staff writer

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