Deutsche Bank plans to cut 18,000 jobs in a sweeping, 7.4 billion euro ($A11.9 billion) overhaul designed to turn around Germany’s struggling flagship lender.
The plan represents a major retreat from investment banking by Deutsche Bank, which for years had tried to compete as a major force on Wall Street.
As part of the overhaul, the bank will scrap its global equities business, scale back its investment bank and also cut some of its fixed income operations, an area traditionally regarded as one of its strengths.
The bank will set up a new so-called “bad bank” to wind down unwanted assets, with a value of 74b euros ($A11.9b) of risk-weighted assets.
The depth of the restructuring shows that Deutsche is coming to terms with its failure to keep pace with Wall Street’s big hitters such as JP Morgan Chase & Co and Goldman Sachs.
The cuts were foreshadowed on Friday, when the head of Deutsche’s investment bank Garth Ritchie agreed to step down.
Chief executive Christian Sewing, who now aims to focus on the bank’s more stable revenue streams, said it was the most fundamental transformation of the bank in decades.
“This is a restart,” he said.
“We are creating a bank that will be more profitable, leaner, more innovative and more resilient,” he wrote to staff.
Sewing will now represent the investment bank on the board in a shift that illustrates the division’s waning influence.
The chief executive had flagged an extensive restructuring in May when he promised shareholders “tough cutbacks” to the investment bank.
This followed Deutsche’s failure to agree a merger with rival Commerzbank.
There were media reports from Reuters and others that Deutsche Bank could cut as many as 20,000 jobs – more than one in five of its 91,500 employees.
The bank said it would reduce headcount to 74,000 by 2022.
Deutsche Bank gave no geographic breakdown for the job cuts. The equities business is focused largely in New York and London.
A person with direct knowledge of the matter said job cuts would be distributed around the world, including in Germany.
The board met on Sunday to agree the proposed changes, one of the biggest announcements of job cuts at a major investment bank since 2011 when HSBC said it would axe 30,000 jobs.
Deutsche said it expects a 2.8b euro ($A4.5b) net loss in the second quarter as a result of restructuring charges and a loss for the full year.