Morning Coffee: Deutsche Bank (literally) can’t fire enough people. What happens when your colleagues get laid off

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Deutsche Bank is in the midst of laying off roughly 7,000 employees, and in theory, the vast majority of the 1,700 or so front-office cuts have already been made. So, what’s holding Chief Executive Officer Christian Sewing back from hitting his target goal in short order? Powerful unions that are making it rather difficult to cut headcount, despite the fact that many who could be affected seem happy to go.

The German lender is looking to cut roughly 1,000 middle and back-office jobs within its retail division, according to Bloomberg. The only problem is that Deutsche Bank signed a pact with unions in which it promised to not fire retail employees for business reasons before mid-2021. That means the bank can’t just hand out a bunch of pink slips. If it wants to cut headcount, Deutsche Bank will need to offer employees early retirement or severance packages – expensive moves not typically required for retail redundancies.

The ironic part of the whole ordeal is that a large number of Deutsche Bank employees who could be affected by the cuts are raising their hands rather than ducking behind cubicles. A year ago, Deutsche Bank rolled out a voluntary redundancy program aimed at cutting its retail staff by 1,000. The program was “heavily oversubscribed,” meaning many were happy to take a lump-sum check and join the unemployment line. Deutsche Bank’s fourth quarter restructuring costs hit $474 million last year. Firing lower-salaried employees will cost Deutsche Bank a pretty penny – or it can just keep them around for another three years.

Elsewhere, one of the largest banks in the Nordic and Baltic regions is proving again what happens when mass layoffs are announced well ahead of time. Nordea Bank, which announced its goal in October of cutting around 6,000 jobs globally, is unsurprisingly suffering from a morale problem, according to Bloomberg. A former investment strategist at Nordea said that employees who have so far been unaffected by the cuts are stressed out as they continue to look over their shoulder. The end-result has been a flood of voluntarily departures by senior members of the bank. Deutsche Bank has suffered from the same fate, seeing several big names walk out the door of their own accord. Call it collateral damage.


Goldman Sachs and Morgan Stanley bankers have already concluded what is likely one of their shorter assignments. Elon Musk announced that he is scrapping plans to take Tesla private after hiring both banks as advisers. Morgan Stanley had been on the job for less than three days. (NY Times)

Wells Fargo is cutting 638 jobs within its mortgage department. (Bloomberg)

Hedge fund titan Ray Dalio is planning a new book detailing the 2008 financial crisis and his thoughts on how it could have been avoided. “Template for Understanding Big Debt Crises” will drop on Sept. 10. Dalio’s first book, “Principles,” was a New York Times bestseller. (Westfair)

Goldman Sachs has become the biggest player in a new business of sorts known as the “guaranteed close,” where banks promise to honor the 4 p.m. closing price of a particular asset and then try to pair up buyers and sellers after the closing bell. The new strategy has found some skeptics who believe banks that are stuck with buy or sell orders can move market prices as they look to protect themselves. (WSJ)

Citigroup believes that its Asian equities business will post its best performance since the financial crisis. That would be comforting news for Citi execs as the unit has hired 30 people over the last year. (Bloomberg)

The former UBS trader who was jailed for illegally trading away more than $2 billion is set to be deported to his native Ghana. Foreign nationals who are sentenced to more than four years in the U.K. are required to be deported, though Kweku Adoboli has spent the last three years in Britain following his 2015 release. (Bloomberg)

Goldman Sachs has lost the head of an internal quant team to another industry. Former VP Giorgos Papachristoudis is joining AI and machine learning startup Qloo as its chief data scientist. (MarketWatch)

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