The Independent has reported that up to 1,900 jobs could be under threat at Deutsche Bank as executives restructure the business in an effort to reduce costs and increase profitability. The newspaper says that up to half of the job losses could be in London, where the investment bank is mainly headquartered.
The basis of the newspaper's story relies on JP Morgan analyst calculations which apparently suggest that the bank would need to shed this number of staff in order to capture the kind of costs savings Deutsche hopes to make from its investment banking unit. Co-CEO Anshu Jain is said to have indicated that he wants to save around $620m per annum. The JP Morgan note is also said to point out that Deutsche's corporate banking and securities unit has a cost/income ratio of 73%, significantly higher than some of its direct competitors.
This year's bonus round is likely to be an interesting one. And all eyes will now be on Deutsche's third quarter profit figures, which are due out shortly. Some say that Deutsche's mistake has been that the bank has expanded its wholesale banking business at the expense of its retail operations. They point to the fact that a strong retail base is crucial to hedge profitability - something which rivals like BNP Paribas, Credit Suisse, HSBC, Royal Bank of Scotland and UBS appear to have learned long ago.
As Deutsche struggles to get its strategy right, let's hope not too many staff pay the ultimate price for the mistakes seemingly made by those at the top.