The struggling Deutsche Bank of Germany said on Sunday that it will be cutting 18 thousand jobs by 2022, downsizing the volatile investment banking division into a restructuring targeted at bringing back profitability and healthier returns to the shareholders.
The bank which is headquartered in Frankfurt said that it cut nearly a quarter of its total annual expenses from 22.8Bn euros in 2018 to 17Bn euros, through measures like dropping the stock-trading business of the investment bank.
It also intends to trim the division focused on fixed-income investments.
The target is to focus on those areas where the bank is leading in the market, and on businesses with firmer earnings like serving corporate customers.
For years & years, Deutsche Bank has faced challenges due to regulatory penalties & fines, low profits, high expenses, and a dropping share price. The bank went 3 straight years without turning a yearly profit before recording positive earnings of 341M euros for 2018. The Chief Executive Officer, Christian Sewing took over last year & assured faster restructuring after predecessor CEO John Cryan was perceived to have moved way too slowly.
Shares of Deutsche Bank rose 2.5 percent on Friday to 7.18 euros as markets expected an announcement regarding restructuring. That is way below levels from mid of 2015 when the shares traded more than 30 euros per share. Shareholders received a dividend of mere 11 cents per share for 2017 and 2018.
The bank stated that one-time charges from the alterations would result in a net loss of 2.8Bn euros in the 2nd quarter. Exclusive of the charges, net profit would have been about 120M euros.
After the failure of merger talks with German rival Commerzbank, the restructuring followed. Deutsche Bank stated the bank could by this way pursue to make it’s business more profitable and leaner.