Deutsche Bank to Cut Thousands of Jobs -- 3rd Update

By Jenny Strasburg

Deutsche Bank AG on Thursday confirmed plans to cut thousands of jobs as part of an overhaul to reduce costs, as new Chief Executive Christian Sewing attempts to put the troubled lender on a path to stability.

The German bank said its headcount would fall "well below" 90,000 by the end of 2019, from its current workforce of about 97,000 employees. In its equities sales and trading business, executives said they have already begun reducing headcount by about 25%.

The announcement, which confirmed a Wall Street Journal report Wednesday about the bank's plans to cut roughly one in 10 employees, came as Deutsche Bank braced for tough questions from investors at its annual general meeting in Frankfurt.

At the meeting, Chairman Paul Achleitner defended the supervisory board's decision last month to replace former Chief Executive John Cryan as "unavoidable." The new CEO, Mr. Sewing, laid out strategic priorities for the lender, telling investors that the lender remains committed to investment banking.

Mr. Sewing said the bank must balance out trading revenues by building other businesses such as asset and wealth management.

"This time is different," he said, referring to the bank's years-long habit of missing cost-control targets. The lender had already cut 600 employees at the investment bank in the past seven weeks, Mr. Sewing said.

The CEO warned that second-quarter results would reflect a "revenue environment [that] remains challenging," particularly in the investment bank. He didn't provide figures.

Restructuring and severance charges will also hurt full-year results. Mr. Sewing said 2018 results would be hit by restructuring charges of up to EUR800 million ($935.9 million).

Mr. Sewing, like Mr. Cryan before him, also said Deutsche Bank aims to find itself in fewer media headlines, another goal it has missed. "It won't do us any harm to be a bit more boring," Mr. Sewing told investors.

Thursday's announcement of job cuts follow months of thorny debate over how fast and deep job losses should be at the beleaguered bank, the Journal reported Wednesday. The process has divided senior executives and left investors unconvinced. The bank's shares have fallen by nearly a third this year to their lowest level since a crisis of confidence hit the lender in late 2016.

At the investor meeting, the bank's supervisory board and senior executives are facing probing questions about last month's chief executive handoff and the tough choices the lender has to make. They're also confronting a proposal to break up the company.

The meeting follows a messy year for Deutsche Bank. The April 8 ouster of former CEO Mr. Cryan in the middle of his management contract shook employees and appeared botched to some clients and investors.

Less than two weeks earlier, Mr. Cryan told employees in a public memo that he was "absolutely committed" to the job, hoping to draw support from the supervisory board, people involved in internal discussions said.

Instead, the board ousted the Briton, replacing him with Mr. Sewing, a German Deutsche Bank lifer.

Mr. Achleitner told investors Thursday that management-board conflicts were getting out of hand and stalling important decisions under Mr. Cryan, citing "increasing differences of opinion" in the executive ranks.

Mr. Achleitner said leaks of internal information and speculation accelerated the CEO change in March and April. The supervisory board had hoped to announce a new CEO at Thursday's annual meeting rather than last month, he added.

Mr. Achleitner credited Mr. Cryan with improving Deutsche Bank's internal controls and its relationships with regulators. Mr. Cryan also helped the bank boost its capital position and make key decisions such as exiting 10 countries to focus on more important markets, Mr. Achleitner said.

--Euan Conley contributed to this article

Write to Jenny Strasburg at jenny.strasburg@wsj.com

(END) Dow Jones Newswires

May 24, 2018 06:35 ET (10:35 GMT)

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