If you work for the average investment bank, it's nearing the end of summer and you're rolling merrily towards the time of year when you might even start thinking about your bonus. If you work for Deutsche Bank, it's a bit different. - CEO Christian Sewing has avowed his intention of racking up no more than €23bn in costs for 2018, but the bank spent €12.2bn in the first six months alone. In the second half of 2018, Deutsche Bank therefore needs to get costs down to €10.8bn, a 15% reduction on last year. The squeeze is on.
As is invariably the case with squeezes, some people are tired of the pressure. Deutsche insiders complain of cost-cutting, "by any means necessary," and claim people are leaving the bank voluntarily while they still have the chance.
The latest voluntary exits include Christos Tomaras, Deutsche's former co-head of financial sponsors, who only joined from Goldman Sachs in March last year, and Claire Brooskby, a managing director in Deutsche's financial institutions group (FIG). Tomaras is understood to be joining a fintech firm, while Brooksby is thought to be going to J.P. Morgan. Their departures follow those of Kris Triggle, another MD in FIG, and Rainer Polster, Deutsche's head of Austrian investment banking and head of German FIG. Earlier this month, Deutsche Bank also lost Paul Reynolds, its head of EMEA equity research, who quit for a competitor.
"DB is a mess," claims one managing director at the bank. "More people are leaving by their own choice." He points to "dumb" policies like Deutsche's decision to restrict non-essential travel, which he says, "makes no sense in a client-facing business".
If front office bankers at Deutsche are in revolt, middle and back office bankers are gripped by fear. Sewing said in May that he would complete front office redundancies in the investment bank by the end of July. As costs are cut in the coming months, jobs in middle and back office functions like technology, risk and compliance will be in the firing line.
Deutsche Bank declined to comment for this article, but concerned insiders point to various changes that appear to be harbingers of cuts to come. They include the appointment of Angus Vassie as global head of infrastructure and to the recent establishment of a new combined U.S. infrastructure group under Jyothi Rajagopal, an MD previously responsible for large systems architecture in New York. Rajagopal's new group is understood to be about efficiencies rather than redundancies, but Rajagopal is thought to have a mandate to cut costs (and stop the outflow of senior people from Deutsche's U.S. regulatory infrastructure team.)
"Risk, finance and technology will be making cuts next," says one U.S. MD. At the same time, he claims that Deutsche is on a, "big campaign to hire very junior staff whilst giving even more work to those who stay".
Deutsche Bank has also been doing some hiring, however: Tom Spreutels joined in May, for example, as head of FIG corporate banking coverage. The bank has also managed to stabilize its critical technology systems, which are now running nearly 99% of the time.
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