Deutsche Bank Lays Off More Than 100 Senior Bankers to Reduce Costs

In an attempt to reduce expenses, Deutsche Bank DB has laid off 111 senior managers, in particular, directors and managing directors from its retail and wealth management unit. These changes align with the bank’s strategy of trimming higher-paid roles to reduce expenses. According to a Financial Times’ report, the division has also slashed its reliance on external consultants to cut costs by 75%, exceeding the initial target of 70%, which was set in early 2024. This restructuring effort comes as the bank intensifies its cost-cutting initiatives to reduce its cost-to-income ratio.  As of the first nine months of 2024, Deutsche Bank’s cost-to-income ratio is pinned at 77% compared with 80% recorded in the same period last year. The bank aims to bring down this ratio to a more sustainable range of 60-65% by the end of 2025.Claudio de Sanctis, member of the management board and head of Private Bank, said that meeting the cost-income target would require more work “but I am firmly committed to it.” He further added that hitting the target will not only require further cost cuts but also revenue growth across all the business lines.DB’s Private Bank Segment Struggles to Improve PerformanceDeutsche Bank's Private Banking division, which includes both its German mass-market retail unit and wealth management arm, has struggled to generate lesser profit for the bank as the segment contributes only 17.7% of the bank’s profit before tax, while it generates 29.1% of the bank’s total revenues.DB’s Private Bank is considered an underperforming segment, as it failed repeatedly to earn its cost of capital. The segment also suffers from operational issues, including a problematic IT migration that has led to client dissatisfaction and regulatory scrutiny.Deutsche Bank’s Efforts to Reduce CostsReviving DB’s underperforming Private Banking division segment has become a key focus of CEO Christian Sewing's strategy. Under Sewing’s guidance, De Sanctis has implemented aggressive cost-cutting initiatives, including the closure of 50 branches across Germany in the first nine months of 2024, with more closures to come in the upcoming months. He has also merged several management levels and reduced front-office staff by 6.5% to efficiently manage the company’s expense base. Despite these cost-saving efforts, Deutsche Bank is expected to hire new staff within its wealth management segment starting next year. The planned hiring, particularly of relationship managers, reflects a shift toward strengthening the bank's ability to provide personalized advisory services to high-net-worth clients.Deutsche Bank’s Price Performance & Zacks RankOver the past three months, shares of DB have gained 13.3% on the NYSE against the  industry’’s decline of 8.7%.Image Source: Zacks Investment ResearchCurrently, Deutsche Bank carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Other Foreign Banks Taking Similar StepsIn May 2024, Barclays PLC BCS commenced job cuts across investment banking and research division, per people familiar with the matter. This move aligns with the company’s £2 billion cost-cutting program to boost profitability.Several hundred staffers in global markets, investment banking and research were impacted by this move. The latest dismissals validated an earlier Bloomberg report, which indicated that Barclays planned to reduce its personnel in the investment banking division, including trading, advisory services, capital market operations, and the international corporate bank.UBS Group AG UBS, following its acquisition of Credit Suisse, planned to cut jobs in five separate phases, from June 2024 to save costs.In August 2023, UBS announced its plan to lay off around one in 12 employees in Switzerland to reduce costs by more than $10 billion by 2026. In total, 50-60% of former Credit Suisse employees are likely to be made redundant. The news was reported by Reuters, which cited the SonntagsZeitung newspaper.7 Best Stocks for the Next 30 DaysJust released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops."Since 1988, the full list has beaten the market more than 2X over with an average gain of +23.7% per year. So be sure to give these hand picked 7 your immediate attention. See them now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Barclays PLC (BCS): Free Stock Analysis Report Deutsche Bank Aktiengesellschaft (DB): Free Stock Analysis Report UBS Group AG (UBS): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks