Deutsche Bank jobs massacre: Here's what we know about the situation in Sandton
- Some staff at Deutsche Bank's Johannesburg office have apparently received retrenchment notifications.
- The bank’s equity desk in Johannesburg seems set to be closed completely.
- Deutsche Bank is cutting 18,000 jobs globally a part of a painful restructuring.
- For more stories, go to Business Insider SA.
Some South African staff of Deutsche Bank received Section 189 retrenchment letters as part of its global restructuring this week, Business Insider South Africa understands.
The German bank on Sunday announced plans to cut 18,000 jobs by 2022 to improve profitability.
The R140m-a-year South African-born global head of Deutsche's investment bank, Garth Ritchie, resigned just before the announcement.
The job cuts will reduce the massive bank's global workforce to 74,000 – which means that more than a fifth of workers at the bank will be out of a job – and strip out €6 billion (roughly R94 billion) in costs.
There are around 70 staff at Deutsche's Sandton headquarters, and Business Insider SA understands that Deutsche’s equity trading desk will be closed completely, which will affect about half a dozen jobs.
“As we have mentioned in our strategic update this week, globally, we will exit equity sales and trading and re-size fixed income,” Deutsche Bank spokesperson Stuart Haslam said in response to questions about the retrenchments.
Under South African labour law, an employer has to issue section 189(3) notifications to advise staff that it is considering retrenchments. The employer can't finalise the retrenchments before 60 days from the date when staff received the letters.
Deutsche’s fixed income team, which trade bonds, will remain largely unchanged in South Africa, according to one person with knowledge about the job losses.
Last year, Deutsche was the fourth-biggest arranger of bond sales in sub-Saharan Africa, up three places from a year earlier, according to Bloomberg data.
Haslam says the company wants to create a leaner investment bank “totally focused on where it is strongest – on being a focused financing, advisory and capital markets bank. Our corporate bank will sit at the center of Deutsche Bank going forward.”
A year ago, Deutsche Bank shut most of its corporate banking division in South Africa, which cost a reported 50 jobs in advisory, corporate-broking, and sponsor services. Its corporate advisory business had clients like Implats, Sasol, and AngloGold Ashanti, which had to find new sponsors.
The bank suffered a pre-tax loss of €16 million on its South African activities last year, according to the Deutsche Bank annual report.
But in a U-turn earlier this year, Deutsche went a local hiring spree again, with plans to appoint 26 people.
“The hiring we’re currently pursuing is geared toward enhancing the areas where we have global and local strengths, such as fixed income,” South Africa CEO Muneer Ismail told Bloomberg at the time. He wanted Deutsche Bank back at “fighting strength”.
Deutsche first launched its South African activities in 1979, and was a major player in the early 2000s, when it was responsible for a sizeable percentage of share trading in South Africa, and had some of the top investment analysts in the country.
Since then, it has been eclipsed by other international institutions, including JP Morgan, UBS, Merril Lynch, Citigroup, and HBSC – which are all among the top ten equity traders on the JSE. Deutsche Bank does not count among them, according to the latest JSE data. It sold its index-tracking funds (called db X-trackers) to Sygnia two years ago for R325 million.
Business Insider SA understands that Deutsche will retain its banking licence in South Africa, as well as some corporate advisory functions.
The global bank has struggled ever since the financial crisis more than a decade ago, plagued by high costs and a number of scandals. Two years ago it had to pay a $2.5 billion fine in the US and UK following allegations that it rigged interest rates, and faced another large fine for failing to prevent Russian money laundering to the amount of $10 billion.
Deutsche was also one of the biggest lenders to the businesses of US President Donald Trump, and was subpoenaed to hand over documents about this relationship amid a report that Deutsche execs prevented staff from alerting the authorities to suspicious transactions linked to Trump.
Its share price has crashed from €110 in 2007 to €7 before this weekend's announcement, and the news of the retrenchments didn't break that fall. In fact, Deutsche's share price has weakened further, as some investors believe the bank hasn't gone far enough.
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