Graeme Wearden 

Deutsche Bank to slash more than 7,000 jobs; chairman survives revolt – as it happened

German investment bank faces angry shareholders after announcing a wide-ranging restructuring that could hit the City hard
  
  

The headquarters of Deutsche Bank in Frankfurt, Germany.
The headquarters of Deutsche Bank in Frankfurt, Germany. Photograph: Michael Probst/AP

90% of sharebolders back Deutsche chairman

Just in: Deutsche Bank chairman Paul Achleitner has survived attempts to oust him, despite criticism of his role in the company’s troubles

Reuters has snapped the details:

  • 84.4% OF DEUTSCHE BANK SHAREHOLDERS VOTE TO RATIFY ACTIONS OF SUPERVISORY BOARD CHAIRMAN ACHLEITNER FOR 2017

  • 9.05% OF DEUTSCHE BANK SHAREHOLDERS VOTE IN FAVOR OF MOTION TO REMOVE CHAIRMAN PAUL ACHLEITNER FROM SUPERVISORY BOARD; 90.95% AGAINST

That must be a relief for Achleitner after a bruising day. But given the scale of the problems at Deutsche, you could imagine that this might be his last AGM - especially if today’s cost-cutting plan doesn’t deliver profitability.

Umpteen thousands of Deutsche Bank workers will be more concerned about their own future, of course, following the news that more than 7,000 jobs are going. Fingers crossed for them.

And on that note, goodnight. GW

It’s been quite a marathon AGM in Frankfurt today, but it’s now coming to a head.

Out of the mouths of babes and young shareholders....

The cancellation of the US-North Korea summit has sent a new bout of geopolitical jitters through the markets.

Britain’s FTSE 100 has closed 71 points lower at 7716, a drop of nearly 1%.

Fiona Cincotta of City Index says Donald Trump’s decision has unnerved the City:

With trade war fears with China still circulating, Trump aggravating the global community with potential tariffs on the automobile industry and now a cancellation of the Summit with North Korea the geopolitical climate is looking extremely fragile and this is clearly unnerving the markets.

Traders are taking risk off the table, selling out of global equites whilst flows into safe havens such as the Japanese Yen and gold are on the up. Whilst the Japanese yen is over 1% higher, gold has pushed back above $1300 for the first time in over a week.

Shares fall as Trump cancels North Korea summit

Newsflash: Shares are dropping across the globe, after Donald Trump dramatically cancelled next month’s summit meeting with North Korea.

In a letter just released, the US president said he was cancelling the meeting with Kim Jong Un “for the good of both parties, but to the detriment of the world”.

Trump blames the “tremendous anger and open hostility” shown by North Korea -- who called vice-president Mike Pence a ‘political dummy’ earlier today.

The president also warns North Korea that America’s nuclear weapons arsenal is “massive and powerful”; ratcheting up the tensions between the countries again.

Wall Street traders have responded by driving shares down; the Dow Jones industrial average has shed over 130 points, or 0.5%

Shares are also falling in London, with the FTSE 100 now down 42 points or 0.5% at 7746.

Deutsche Bank’s AGM may drag on for some time yet, as there are scores of shareholders keen to have their say....

So in the meantime, here’s Associated Press’s latest dispatch:

Deutsche Bank is slashing thousands of jobs as Germany’s largest lender refocuses its global investment banking business on Europe and seeks to return to steady profitability.

The bank said Thursday it would cut its workforce from 97,000 to “well below” 90,000 in order to achieve cost reduction targets. It said the reductions were already “underway.”

A chief target of the cutbacks is its stocks trading business, mostly based in New York and London. Head count at the equities business is to be reduced by about 25 percent.

Those cuts will cost the bank some 800 million euros ($935 million) this year.

The announcement came just hours before Board Chairman Paul Achleitner had to face disgruntled investors at the bank’s annual shareholder meeting. The bank’s share price has sagged and it paid only a small dividend of 11 euro cents per share last year.

Achleitner drew rueful laughs from the assembled shareholders when he misspoke and said the dividend was 11 euros per share, a mistake he quickly corrected.

Deutsche Bank has struggled with high costs, subpar earnings and troubles with regulators. The bank replaced its CEO in April after three years of annual losses and lagging progress in streamlining its operations.

New CEO Christian Sewing has said the investment banking business would refocus on its European and German customer base and cut back on costlier and riskier operations where it doesn’t hold a leading position. Sewing said the bank was committed to international investment banking but must “concentrate on what we truly do well.”

The new strategy means stepping back from several decades of global expansion in which the bank sought to compete with Wall Street rivals such as Goldman Sachs or JPMorgan Chase.

Sewing replaced John Cryan in April with a mandate to accelerate the bank’s wrenching restructuring. It has suffered billions in losses from fines and penalties related to past misconduct. But progress in cutting costs has remained elusive. Sewing on Thursday affirmed the bank’s goal to hold costs to 23 billion euros this year and 22 billion euros next year.

Deutsche Bank lost €735m last year after U.S. tax changes cost it €1.4bn. Earnings in the first quarter of €120m were sharply down from the year-earlier quarter.

Addressing an audience of several thousands in Frankfurt, Achleitner said Cryan had “set the ball rolling for fundamental change” but later displayed “shortcomings in decision-making and implementation.”

“Dear shareholders, you are right to expect the bank and its management to hit the targets it has set itself,” he said.

“If there are signs those targets are in jeopardy... then we on the supervisory board have to act swiftly and decisively.”

The bank’s troubles and the turmoil surrounding Cryan’s departure have put pressure on Achleitner as well. Cryan was forced to publicly push back against a media report that Achleitner was looking for a replacement, then left to twist in the wind for days before being shown the door.

Achleitner brought Cryan to the bank in 2015 and thus in principle shares responsibility for the bank’s strategy and performance since then.

The selloff is gathering pace, as investors fret about the €800m cost of the job cuts plan (which will hit profits this year).

The WSJ’s Paul J Davies isn’t impressed by today’s restructuring plan.

He writes:

Deutsche Bank is caught in a vicious spiral. It is losing profit-making staff, clients and investors and it desperately needs to restore confidence among all three

Christian Sewing, the bank’s new chief executive, didn’t mention anything at Thursday’s annual investor meeting that will stem these losses. More radical ideas are needed.

Deutsche Bank are threatening legal action against anyone who has leaks details of its board meetings.

That follows media stories in March about boardroom unrest, ahead of John Cryan’s ousting as CEO.

Meanwhile, the AGM cranks on....

Back in Frankfurt, Deutsche Bank shareholders voted to allow chairman Paul Achleitner to chair today’s AGM, with 99% approval.

Achleitner’s reward? Facing more criticism from shareholders, who say he should step down.

The Wall Street Journal’s Jenny Strasburg has the details:

Newsflash: The number of Americans signing on for unemployment benefits has hit a seven-week high.

The initial claims total jumped to 234,000 last week, more than the 220,000 which economists had expected. The previous week’s figure has been revised up too, from 220,000 to 223,000.

These are still low figures in historical terms, reflecting the long-running improvement in the US labor market in recent years.

Klaus Nieding of shareholder lobby group DSW has urged Deutsche Bank’s management to speed up its recovery plan.

Nieding told today’s AGM (via Reuters):

“It is high-time to ... end the years-long and still-popular ‘Deutsche Bank bashing’ and get to work finally getting our bank back on its feet after six long years of restructuring.”

Wowzers. Deutsche Bank’s shares are now down almost 4% -- quite a thumbs-down to Christian Sewing’s cost-cutting restructuring plan.

Professor Brian Scott-Quinn, director of Banking Programmes at Henley Business School, suggests Deutsche Bank is trapped in a ‘spiral of decline’.

Scott-Quinn says that Deutsche should accept that the game is up.

“We really no longer need Deutsche Bank. There are already plenty of retail banks in Germany to provide competition and a good service to consumers. In investment banking it is the same as there are still good European investment banks which can provide a good service to German industry.

It is almost impossible now to recover from years of mismanagement. At the same time, to attract the people they still need, they have to pay more than others where bonus prospects are much better. It is a spiral of decline and it started perhaps 20 years ago, even before the financial crisis.

“Barclays, along with other European banks, are perfectly capable of meeting the needs of German industry for corporate and investment banking services. Deutsche might be better acknowledging that its days as a global champion and as a German regional champion are over and that sometimes banks reach the end of their lives.”

It wouldn’t be easy to send Deutsche Bank shuffling off into retirement, of course. Apart from anything else, it has a famously huge exposure to derivative contracts -- estimated at €46 trillion in 2016 (the potential losses on the portfolio would be rather lower).

Here’s a photo of Deutsche Bank’s new CEO, Christian Sewing, outlining his cost-cutting plans to shareholders:

Oops indeed...

Deutsche Bank shareholders are voting on whether to allow Paul Achleitner to actually chair today’s AGM (a fairly crucial part of a chairman’s duties)....

Deutsche Bank still haven’t revealed exactly how many jobs are being cut under the restructuring announced today.

All we know is that the headcount is being reduced from 97,0000 to “well below’ 90,000. So that must be more than 7,000 jobs -- and could even be the 10,000 figure that was rumoured last night.

Deutsche Bank would rather tell us that it will be serving 9,000 Frankfurter sausages to shareholders today, along with pretzels and slices of cake:

Deutsche Bank’s share price is continuing to slide, and is now down 2.5% in Frankfurt trading.

Job cut announcements usually trigger a share price rally (investors usually ignore the grim implications for staff and celebrate the cost savings). Christian Sewing must be disappointed not to get a better reaction to his plan.

One theory is that shareholders aren’t happy that the restructuring will cost €800m, making a dent in Deutsche’s profitability this year.

Wild scenes at the AGM....

It’s really kicking off at the Deutsche Bank AGM:

Shame the bank won’t let us watch it remotely -- so much for CEO Sewing’s pledge to offer more clarity....

Deutsche stops streaming AGM as critics pile in

Deutsche Bank shareholders are now having their say at the AGM -- giving them the chance to demand chairman Paul Achleitner’s resignation.

Unfortunately, Deutsche Bank have suspended their live feed from the annual meeting - it’s playing some lift muzak, not the sound of angry investors letting rip. Not a good look at all.

Fortunately, some journalists are tweeting from the event, such as the FT’s Patrick McGee:

Updated

Deutsche Bank’s shares have now dropped into the red, down 0.7% at €10.80.

That suggests investors aren’t convinced that Sewing’s plan to slash jobs and reduce its investment banking operations will resolve all the bank’s problems - even though he insists the cost-cutting will help boost profitability.

Updated

Six hundred investment bankers have left Deutsche Bank in the last seven weeks, according to CEO Christian Sewing.

He has told today’s AGM that the huge job cuts announced this morning are already being implemented:

He says:

This reduction is already fully underway, and so far, due to the considered way we’ve handled this, we have not seen any meaningful revenue attrition.”

Sewing says that Deutsche will also consider hiring freezes, and cutting the use of contractors.

He also says that staff want ‘clarity’ -- so the bank is going to stop endlessly debating plans and actually ‘execute’ them.

In conclusion, Sewing says he wants to make people proud to work for Deutsche, or invest in it, again -- a tacit admission of how the bank has fallen from grace in recent years.

Today’s job cuts mean that Deutsche Bank is abandoning its goal of competing directly with America’s investment banking giants, says Associated Press:

New CEO Christian Sewing has said the bank would refocus on its European and German customer base and cut back on costlier and riskier operations where it doesn’t hold a leading position. Sewing said the bank was committed to its international investment banking operations but must “concentrate on what we truly do well.”

The new strategy means stepping back from several decades of global expansion in which the bank sought to compete with Wall Street rivals such as Goldman Sachs or JPMorgan Chase.

Sewing also warns shareholders that trading conditions remain tough, as it starts to cull workers.

Deutsche CEO: Job cuts are difficult but necessary

The Axeman Cometh, as CEO Christian Sewing starts to address Deutsche Bank’s AGM in Frankfurt.

On today’s huge job cuts, Sewing says it is “a difficult situation” but Deutsche’s current financial position leaves him with “no choice”.

We need to lay the basis for long-term profitability.

Our long-term goal is to put Deutsche Bank back at the centre of society, adds Sewing, a little enigmatically.

Oddly, Sewing also says it is a ‘good idea’ to write yourself a letter when you begin a new task - only to reveal that he didn’t bother when he became CEO!

Updated

Pound jumps as retail sales beat forecasts

Newsflash: Back in the UK, retail sales have surged as shoppers returned to the high street last month.

Retail sales volumes (the amount of stuff bought) jumped by 1.6% in April compared to March, when the Beast from the East dumped snow and ice on Britain.

Encouraging news for the economy, and has sent the pound jumping by half a cent to $1.34 (away from yesterday’s five-month low).

However, sales have barely risen over the last three months, suggesting British consumers remain cautious and cash-strapped.

Rob Kent-Smith, Head of National Accounts says:

“Increases were seen across all sectors in April, except department stores. Department stores declined following relatively strong sales last month, when their online sales were boosted during the adverse weather.

Over the longer-term, retail sales growth has slowed considerably, with increases in food, household goods and internet retailers being largely offset by declines across all other types of retailing.”

Full story: Heavy job cuts at Deutsche

Here’s our news story on Deutsche’s job cuts:

Deutsche Bank, Germany’s largest lender, is to cut more than 7,000 jobs globally, with its investment banking business in London likely to be hit.

Deutsche said one in four jobs in its equities sales and trading business would be axed. The bank’s global headcount is expected to fall from just over 97,000 to well below 90,000. The firm said it would not provide a breakdown at this stage but that all regions will be affected.

Deutsche’s largest investment banking operation is based in the City of London. It employs about 8,500 people in the UK – mostly in London, with smaller operations in Birmingham and Bournemouth – and is one of the largest employers in the City.

The news came a few hours before the group’s annual shareholder meeting in Frankfurt, due to start at 9am London time, where the group is expected to face a protest from shareholders over its poor performance.

Deutsche’s new chief executive, Christian Sewing, said: “We remain committed to our corporate and investment bank and our international presence – we are unwavering in that … However, we must concentrate on what we truly do well.”

When Sewing, the former co-head of the bank’s retail banking arm, was appointed to replace his British predecessor, John Cryan, in April, he vowed to take “tough decisions” to return the bank to profitability.

Deutsche has suffered three years of losses and Cryan had been criticised for being too slow in pushing through cost-cutting measures.

Paul Achleitner is now claiming that Deutsche’s board should be praised for handing back some bonuses, in recognition of the problems at the bank.

Achleitner reminds the AGM that eleven executives who served during the financial crisis agreed to wave €38.4m of bonuses, even though an internal investigation found that no-one could be held personally responsible for Deutsche mistakes.

Chairman Achleitner is trying to refute claims that he botched the change of CEO last month.

He insist that Christian Sewing (who has worked at Deutsche Bank) is the right man to lead the company, rather than a heavy-hitting external candidate.

Achleitner says Sewing is the right man, because he is a Deutsche man.

Christian Sewing is our first choice..... He is Deutsche Bank through and through.

True, but this hasn’t prevented Sewing from deciding to lay off thousands of fellow Deutsche workers today. And it won’t please critics who argue that Deutsche needs fresh blood.

Deutsche Bank AGM underway

Deutsche Bank’s AGM is getting underway in Frankfurt.

Chairman Paul Achleitner is getting his defence in early, telling shareholders that he hadn’t planned to oust CEO John Cryan last month - but was forced to act due to a leak.

Achleitner says:

We had to act - even though it wasn’t originally our intention to make our change so swiftly.

Personally I had hoped that the reshuffle at the top of our bank would be made in a constructive spirit at today’s annual general meeting.”

He adds that Deutsche’s management had failed to show sufficient discipline when sticking to strategy plans over the last year.

This led to last year’s disappointing loss (the third in a row), forcing the supervisory board to reshuffle its top team.

Achleitner is now berating those who leaked details of the reshuffle over Easter - this damaged the bank, and forced the early appointment of Christian Sewing to replace CEO John Cryan.

No wonder Deutsche’s shareholders are angry - the bank’s value has slumped by a third in the last year.

Dr. Hans-Christoph Hirt of Hermes Investment Management, a Deutsche Bank shareholder, blames chairman Paul Achleitner for the company’s woes.

Hirt tells Bloomberg TV that Achleitner has failed in three ways:

  • Too much managerial change; with Deutsche Bank now on its fourth CEO under Achleitner
  • No strategy to create value
  • A lot of turnover on the supervisory board.

These are all important responsibilities for a chairman, Hirt says, adding:

In our opinion, he hasn’t done a particularly good job.

However, Hermes won’t support today’s no-confidence vote, as it believes Deutsche doesn’t need any more disruption.

We will give him one last warning - saying you need to do better, you are in the last-chance house.

Protesters have gathered outside Deutsche Bank’s AGM in Frankfurt.

They are calling on the bank to “get out of coal, weapons and tax havens”, with a sign reading “Deutsche Bank: Ich krieg die Krise’ (literally,” I’m getting the crisis”).

Updated

Deutsche chairman faces no-confidence vote

Angry investors will try to oust Deutsche Bank’s chairman, Paul Achleitner, at its AGM today.

Achleitner is under fire for failing to stop Deutsche’s track record of underperformance in recent years, and for a series of strategic zig-zags that have left shareholders dizzy.

He now faces a vote of no-confidence from investors who believe his time is up.

Achleitner made his name selling East German government assets following reunification in 1990. He has been chairman of Deutsche since 2012 - a time in which Deutsche has struggled to shake off the legacy of the financial crisis.

The New York Times explains:

Mr. Achleitner left Allianz in 2012 to become chairman of Deutsche Bank, overseeing the executives who run the company on a day-to-day basis.

Deutsche Bank had grave problems. The culture was toxic. Large swaths of the business were poorly managed. Risks were not controlled. The bank had a tendency to needlessly antagonize regulators. It was caught up in just about all of the industry’s worst scandals: rigging interest rates, selling toxic mortgages, laundering money, violating sanctions.

Rivals like UBS and Credit Suisse scaled back their investment banks in the wake of the financial crisis. But Deutsche Bank, with Mr. Achleitner’s backing, continued to try to play in the Wall Street big leagues.

Mr. Achleitner insisted that Europe needed a counterweight to the big American investment banks. “If we don’t watch out,” he said in an interview with a German magazine in May 2015, “we’ll have the same American dominance that we already have in the internet.”

Shares in Deutsche Bank have risen 0.4% in early trading in Frankfurt, as investors react to today’s job cuts.

Postbank and US operations in the firing line too

Postbank, which is Deutsche Bank’s consumer banking unit, faces heavy job losses under today’s restructuring plan.

Last night, the Financial Times reported that workers in the US and the City are also at risk:

The person familiar with the bank’s plans said that the 10,000 jobs included “a few thousand jobs” at Deutsche’s German retail division Postbank, which were already earmarked to be culled.

The Wall Street Journal first reported the plans on Wednesday.

Roughly half of the additional job cuts would be taking place in the group’s struggling investment bank, he added. “Most of the cuts will happen in the US, but London will see the axe too.”

Updated

Deutsche is trying to convince investors that it’s serious about returning to profitability after three years of losses, says the AFP newswire.

It adds:

The bank said it would slash leverage exposure in the investment bank by 10 percent of “the €1,050bn of leverage exposure reported at the end of the first quarter of 2018.”

Will City be badly hit?

A Deutsche Bank spokesperson says that today’s job cuts will affect ‘all regions’, but they won’t give a detailed breakdown.

However, it seems certain that the UK will be hit, as Deutsche’s biggest investment banking office is in the heart of London’s Square Mile.

Deutsche employs 8,500 people in the UK, making it one of the biggest employers in the City.

The bank says:

Deutsche Bank chooses to base its largest investment banking operations in the City of London, a centre of global flows of trade and wealth. We use this position as a global bank to keep our UK clients connected to markets, and help clients do business all over the world.

It also has offices in Birmingham and Bournemouth.

Updated

Deutsche Bank to slash 'well over' 7,000 jobs

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

Deutsche Bank has sent a shiver through the City by announcing that it plans to lay off thousands of staff worldwide.

German’s biggest bank plans to cut its headcount to ‘well below’ 90,000, from 97,000 today, as it shake up its corporate and investment banking operations.

It says:

The number of full-time equivalent positions is expected to fall from just over 97,000 currently to well below 90,000. The associated personnel reductions are underway.

The move follows rising investor anger over Deutsche’s performance - the bank has posted three annual losses in a row, and sacked CEO John Cryan last month.

Cryan’s successor, Christian Sewing, had pledged to cut back on risk operations and refocus on Europe - and he’s now wielding the axe.

In a statement, Sewing says:

“We remain committed to our Corporate & Investment Bank and our international presence, we are unwavering in that....

However, we must concentrate on what we truly do well.”

Deutsche’s corporate and investment bank will face the brunt of the restructuring. The wide-ranging cuts include 25% headcount reduction at the bank’s equities sales and trading business following a review of the business.

The announcement comes just a few hours before Deutsche faces investors at its annual general meeting on Thursday.

More details and reaction to follow....

Also coming up today:

New retail sales figures will show whether UK consumers hit the shops in April, as the cold snap ended. Economists predict that sales jumped by 0.8% during the month, after a 1.2% decline in March.

A weak reading, though, might weaken the pound and spark fresh concerns about the UK economy and consumer confidence.

The Bank of England will be hosting Markets Forum 2018 - a conference to discuss measures to stamp out misconduct and make the financial world fairer and more effective.

The agenda:

  • 9am BST: The Bank of England’s Markets Forum 2018
  • 9am BST: Deutsche Bank annual meeting begins
  • 9.30am: UK retail sales for April
  • 1.30pm: US initial jobless claims figures

Updated

 

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