Deutsche Bank Is Said to Be Planning Cuts to US Jobs

Deutsche Bank Is Said to Be Planning Cuts to US Jobs

Deutsche Bank said it plans to shrink its equities-trading business and its prime-brokerage business, which loans money and securities to hedge funds and other trading clients.

Deutsche Bank shares are in the red Thursday after the German bank announced a 79% drop in profits in the first-quarter of the year.

The bank said its whole asset management group had net outflows of €8 billion for the first quarter, which it attributed to redemptions from a European insurance client and a US client. Big questions remain about where they go next-and at Deutsche whether the new chief executive, Christian Sewing, really can make any big changes.

Deutsche will also retreat from some trading in bonds and other financial market products in the U.S. to pursue the "more attractive returns" on offer in Europe.

The German bank will reduce its corporate finance businesses in the USA and Asia, pare US rates sales and trading, and review its global equities business with an eye toward downsizing it, according to the statement. Sewing also said that while they were in a good position regarding corporate and investment banking, they were not strong enough in other areas and needed to readjust their strategy and act in a decisive manner. "There is no time to lose as the current returns for our shareholders are not acceptable". The bank made a return on tangible equity of 0.9 percent, compared with 4.5 percent in the first quarter of the previous year. Glg Llc who had been investing in Deutsche Bank Ag (Call) for a number of months, seems to be less bullish one the $29.71 billion market cap company. The bank warned of "material job cuts" this year, particularly at the investment bank. "The focus right now is on execution, making sure we move quickly to adjust the businesses to that core perimeter". That is being reduced with three departures as previously announced, while Deutsche Bank said co-head structures in business divisions are discontinued. ValuEngine lowered Deutsche Bank from a "buy" rating to a "hold" rating in a research note on Wednesday, February 7th.

Deutsche said on Thursday: "The bank will scale back activities in United States rates sales and trading, shrinking the balance sheet, leverage exposure and repo financing while remaining committed to its European business, which given its scale and relevance to our client base generates more attractive returns". The bank aims to get more profits by the end of the year through its $800 million restructuring project and a considerable cut of employees. Its German home market trails the U.S. and retail- and investment-banking profitability, and compared to its big Swiss rivals, Deutsche Bank lacks scale in private banking and wealth management.

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