Deutsche Bank’s Radical Overhaul: Job Cuts, Focus on Investment

Deutsche Bank AG is planning a radical overhaul after the fund’s mishaps to focus on its investment banking business.

The new downsizing will see the bank cut 18,000 jobs, or one-fifth of its workforce, split its investment unit in two, and end its equities business following a $3.1 billion second-quarter loss.

The bank will also pause its dividend payouts this year and next as well as pay $8.3 billion in restructuring fees through 2022. This is the first time a dividend won’t be distributed since 1993.

The move will cut what Deutsche calls “risk-weighted assets” by about 40%, or $82 billion. The aftermath will see the creation of the “Corporate Bank,” which will manage areas of the balance sheet stemming from the abandoned or diminished businesses. It will be comprised of the Global Transaction Bank and the German commercial banking units.

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This means several changes to the executive side. Board members Frank Strauss, head of retail, and Sylvie Matherat, chief regulatory officer, will leave at the end of the month. So will investment bank head Garth Ritchie. Stefan Hoops will head the new corporate bank. Christiana Riley , Bernd Leukert, and Stefan Simon will run its Americas, data and innovation, and regulatory and legal affairs divisions.

CEO Christian Ewing said in his Monday presentation that returns for Deutsche had been too low while costs were too high. This also comes off the collapse of the bank’s attempt to merge with Commerzbank in April. When the government-brokered deal evaporated, so did Ewing’s options to rally investors.

“I am very much aware that in rebuilding our bank, we are making deep cuts,” said Ewing in Sunday’s internal memo. “I personally greatly regret the impact this will have on some of you. In the long-term interests of our bank, however, we have no choice other than to approach this transformation decisively.”

Deutsche Bank will also spend $19 billion on tech and control improvements. The firm has been hit with fines from US and European watchdogs for various compliance failures and risky transactions due to money laundering scandals and ties to President Donald Trump. The bank invested in some of his deals after competitors stayed away due to a string of bankruptcies.

Deutsche Bank Raided in Money-Laundering Scandal

Tags: Christian Ewing, Deutsche Bank, Investment Bank, jobs, Restructure

Brazilian President Jair Bolsonaro could see his pension reform reach the National Congress’ lower house as early as Tuesday, according to the body’s leader, Rodrigo Maia.

Last week, the overhaul proposal passed in a congressional hearing, keeping investors and Bolsonaro alike happy. It can now move to the lower house of Parliament, where two successful voting rounds will send it to the Senate.

The retirement changes are one of the president’s top priorities. He introduced the overhaul in February, shortly after taking office. The plan aims to save billions for Brazil’s social security system by implementing a minimum retirement age and toughening the requirements to access the benefits.

Economy Minister Paulo Guedes estimates a proper reform would save as much as 3 trillion reis ($783 billion) over 20 years.

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The bill has seen various delays and amendments, but Bolsonaro is hoping it can still be passed this year. He’s at least hoping it will get past the lower house before lawmakers take their mid-year break later this month.

After a weekend of talks with leaders, Maia said he expected a Tuesday vote, according to Brazil’s Chamber of Deputies, the lower house.

“Brazil has almost 10 million Brazilians living below the poverty line, it is not possible that a country with so many opportunities and so much wealth and wealth is concentrated in the hands of few people,” he said, adding that reform is “the first step” toward balancing the economy.

Tags: Brazil, Brazil Pension Reform, Jair Bolsonaro, Pension, Rodrigo Maia