Downgrading Bonn from head office to a secondary location would be a significant shift from Deutsche Bank’s previous strategy, which had left intact much of the infrastructure that it inherited through the takeover of German retail and commercial lender Postbank.
Wednesday 28, August 2019
Deutsche Bank is considering whether to centralise its retail head office in Frankfurt and pull back from other locations, reported Bloomberg.
The bank currently spreads the main operations for its German retail division across several cities, mostly Bonn and Frankfurt, and focusing on its global headquarters could help drive down costs, no decision has been taken and Frankfurt is unlikely to be exempt from job cuts even if functions are shifted.
Chief Executive Officer Christian Sewing in July unveiled the bank’s most ambitious restructuring plan yet, centred around cutting a fifth of the workforce and pulling back from equities. He’s made clear that the job cuts will hit Germany.
Sewing, in his previous role as retail head, vowed in 2017 to wring EUR 900 million ($998 million) in annual cost savings from merging Postbank with Deutsche Bank’s German retail bank. At the lender’s most recent restructuring announcement, he said he would cut costs at the retail division—which also includes wealth management and some foreign retail operations—by EUR 1.4 billion by the end of 2022.
Any decision on new job cuts and the head office is likely to run into heavy opposition from labour unions, one union representative said. The bank has existing agreements with the unions that largely limit the way it can cut jobs in Germany before mid-2021 to voluntary agreements with employees, such as early retirement programmes.
It’s not clear how many out of the 18,000 jobs Sewing wants to cut in Germany. Former retail head Frank Strauss said in May the division will continue to shed about 2,000 jobs per year or about 8,000 positions over the plan’s duration.
The bank has also indicated it will focus the cuts on back-office roles. A large part of those are in Germany, though the lender also has big back offices in places such as the US, India and the Philippines.
Deutsche Bank is considering whether to simplify the legal structure of the German retail unit known as PFK, which currently has its own management and supervisory boards. Dissolving those would save costs, though it would need regulatory approval, they said. Handelsblatt first reported on the potential legal change.