Deutsche Bank to Cut 3,500 Jobs

Deutsche Bank announced on Thursday that it plans to cut 3,500 jobs, initiate a share buyback, and pay dividends as part of its ongoing efforts to demonstrate to investors that its turnaround is progressing successfully. The move comes as Germany’s largest bank reported a 30% decline in fourth-quarter profit, beating analyst expectations.

The bank, which has been seeking stability by focusing on retail banking and putting years of turmoil behind it, had already announced plans for job cuts, but this is the first time it has specified the number, representing just under 4% of its global workforce of approximately 90,000. The affected jobs will primarily be in back-office roles.

Deutsche Bank will undertake a share buyback and dividends totalling €1.6 billion ($1.7 billion) during the first half of the year. The bank also raised its forecast for revenue growth, leading to a 4% rise in its shares in early Frankfurt trade.

This announcement comes at a crucial juncture for Deutsche Bank, as its retail unit overtook the investment bank as the main revenue driver in 2023. The bank’s retail division has benefited from higher interest rates, while global deals in the investment bank have slowed. Analysts anticipate the retail operations to continue leading ahead of the investment bank, even as central banks consider cutting interest rates.

Deutsche Bank’s restructuring efforts in recent years have aimed to reduce dependence on the volatile investment bank for revenues. The retail division’s prominence has come amid regulatory scrutiny and challenges stemming from the integration of its Postbank arm.

The fourth-quarter profit decline of 30% was not as steep as analysts had feared, with net profit attributable to shareholders at €1.26 billion. The full-year profit fell to €4.21 billion from €5.03 billion a year earlier but surpassed analyst expectations.

The bank is optimistic about the future, raising its compounded annual growth rate target for revenues and expressing confidence in meeting its 2025 targets. Deutsche Bank CEO Christian Sewing acknowledged the potential challenges in the economic environment but remained positive about the bank’s prospects.

The move to cut jobs, buy back shares, and pay dividends is part of Deutsche Bank’s broader strategy to navigate the evolving banking landscape and position itself for sustained profitability.