Deutsche Bank is cutting another €500m of costs, but also hiring MDs
It's Deutsche Bank's global financial services conference this week, and Deutsche CEO Christian Sewing took to the stage today to elaborate on the German bank's strategy. It's all about cost-cutting, but it's also all about hiring.
Deutsche had already committed to cut costs by €2bn by 2025 and Sewing upped the ante: the bank will now cut another €500m by the same date. Deutsche is currently engaged in a "strategic review of the entire workforce," said Sewing ominously. It's also looking at "opportunities from AI and machine learning," which it thinks will lead to "significant benefits in process and automation."
While anyone at Deutsche Bank in a job that could be done by AI looks vulnerable to the new cuts, the German bank is also all about adding senior investment bankers. Investment banking head Fabrizio Campelli said yesterday that Deutsche has already hired 50 senior bankers this year. Sewing said today that the bank plans to continue to strengthen its advisory capabilities, "around the world, including in APAC."
What makes Deutsche so bullish? Sewing said today that he's convinced that hiring all the new bankers will enable the bank to increase market share, increase revenues and "build up substantial capital to eventually increase the return on tangible equity and shareholder payoffs.” He added that the bank is feeling emboldened by existing market share gains, ratings upgrades and positive reviews from analysts. Deutsche now wants to be, "the market leader in as many segments as possible to decisively shape the future of the European investment banking industry."
While this is a laudable aim, at 75% in Q1, Deutsche's cost income ratio is still far higher than the bank's target of 62.5% by 2025. Sewing didn't say so but the additional hiring is therefore a big bet that markets and revenues will recover in 2024.
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