Deutsche Bank to slash equities business after $11.9 billion overhaul

Deutsche Bank is taking the knife to its Australian equities business as part of a global cost-cutting plan, with about 50 jobs expected to go in the short-term as it stops providing research, and cuts sales and trading roles.

Staff were told the news on Monday, after the German lender announced overnight it would cut 18,000 staff worldwide as well as scrap its global equities business and scale back its investment bank in a broad €7.4 billion ($11.9 billion) restructure.

Deutsche Bank will shed around 18,000 employees globally in the overhaul.Credit: AP

The bank provided no comment on its Australian operations. It would not say how many jobs would be cut, nor how many people the bank employed in Australia.

However, sources said close to 50 roles would go in the near future as the bank stopped providing research on equities to clients and cut back on other roles.

Deutsche Bank has been operating in Australia since 1973, with offices in Sydney, Melbourne and Perth.

In Australia, the bank provides services across corporate finance, equities, fixed income, currencies and global transaction banking.

Deutsche Bank chief Christian Sewing.Credit: AP

The bank's website says its Sydney office has 700 people and is one of its four hubs, including Hong Kong, Singapore and Tokyo, in the Asia-Pacific region.

When contacted for comment on its Australian operations, Deutsche Bank pointed reporters to its previous global press releases.

Sources said the Australian equities operations of the bank were profitable, and suggested the decision to slash jobs was driven by head office in Germany, rather than in Australia.

It is expected the bank will continue to operate in mergers and acquisitions, and interest rates and fixed income trading.

The bank announced it would scrap its global equities business, scale back its investment bank and cut some of its fixed-income operations as it seeks to cut total costs by a quarter by 2022.

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."

The CEO 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.

Deutsche Bank will also set up a new so-called "bad bank" to wind down unwanted assets, with a value of €74 billion ($119 billion) of risk-weighted assets.

The board met over the weekend to agree to 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 Bank has 700 staff in Sydney alone. Credit: Ryan Stuart

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.

Stephan Szukalski, head of the DBV union, told Reuters that the measures were in the right direction, echoing the sentiment of the Verdi labour union.

"This could be a real new beginning for Deutsche Bank," said Szukalski, who also sits on the bank's supervisory board.

Deutsche Bank said it expects a €2.8 billion net loss in the second quarter as a result of restructuring charges and loss for the full year.

Deutsche Bank will have been in the red for four out of the five last years. Its shares fell to a record low last month.

Michael Huenseler, head of credit portfolio management at Assenagon Asset Management, said a lot had to go right for the plan to be successful.

"The margin for error is...low," he said.

AAP, Bloomberg, Reuters