Deutsche Bank has got an issue: as of May 2020, it still had 13,081 job cuts left to make out of the 18,000 it announced in July 2019. Half of DB's 18,000 cuts were always due to come in Germany, where staff are being let go following the merger of Postbank with Deutsche Bank’s retail business and where the bank is now trimming 20% of branches in response to the virus, but this still leaves at least 4,000 jobs to be removed elsewhere. And actual removals may be necessary, because all of a sudden no one wants to leave.
Speaking today at Bank of America's annual financials conference, Deutsche Bank CFO James von Moltke said that Deutsche Bank is behind on its cost reduction plans. This is partly because the bank called a hiatus on layoffs during the early lockdowns, but is also because the voluntary staff turnover Deutsche Bank had counted upon to reduce its headcount doesn't seem to be happening after all. Von Moltke said the bank may have to hike severance payments as a result, which sounds a lot like a euphemism for cutting heads.
Last year, Deutsche Bank said 8% of its employees left voluntarily. Given that 8% of DB's 2019 headcount was 7,036 people, it presumably didn't escape the notice of Von Moltke and other senior managers that the bank could achieve its headcount targets this year if it simply sat on the sidelines waiting for people to leave without hiring in replacements.
This plan appears to have been scuppered by the virus, which is encouraging those who actually have a seat to sit in it rather than risking a new job elsewhere. Headhunters say it's not just Deutsche that's experiencing this phenomenon: "People aren't wedded to DB. The problem is that it's just not very obvious where else they'd go right now," says one.
Deutsche Bank might also have become an accidentally appealing employer. CEO Christian Sewing has said several times that cuts to front office roles in the investment bank are over, and Barclays' bête noire Edward Bramson has held up DB as an example of a bank that's successfully implemented a strategy that other banks should follow. In the U.S., Deutsche has added to its allure by telling staff they don't need to return to the office until 2021 even as rivals summon staff to their desks.
Of course, some of this could be reversed. If Von Moltke wants staff to leave, Deutsche could always encourage staff to convene at London Wall and 60 Wall Street as soon as possible. It could also ask its managers to take another 'solidarity sacrifice' to their pay (although it's unclear how successful the first one was). Alternatively, Deutsche could simply ask a lot of its people in London to move to Frankfurt in preparation for Brexit. One Frankfurt MD says the bank prepared a lot of space in Frankfurt for London staff a few years ago but no one turned up. "It was my impression that they would rather get fired and look for a new job in the City," he says. Magic.
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