Market volatility sees Deutsche Bank issue a revised outlook for 2011
Bank announces 500 jobs to go as volumes and revenues in its Corporate Banking & Securities Corporate Division decline, however, Global Transaction Banking is expected to deliver its best pre-tax profit ever.
As the sovereign debt crisis continues to wreak havoc on European and US banks shares, Deutsche Bank announced that it will shed 500 jobs in its Corporate Banking and Securities division, and said its pre-tax target of EUR 10 billion for 2011 was "no longer achieveable."
Josef Ackerman, chairman of the management board and the group executive committee of Deutsche Bank made the announcement while speaking at a London investor conference.
Deutsche Bank said the Q3 2011 results for its Corporate Banking and Securities was likely to come in much lower than expected as a result of the "intensifying European sovereign debt crisis, [which] led to sustained uncertainties among market participants in the third quarter and thus to significantly reduced volumes and revenues in particular in the Corporate Banking & Securities (CB&S) Corporate Division." The bank stated that against this background as well as ongoing market turbulence, the planned pre-tax target of EUR 10 billion from its core businesses was no longer achievable for 2011. The bank also expects higher impairment charges (EUR 250 million) in Q3 on Greek sovereign debt.
"Additional cost controls" it will consider include reducing staff in its CB&S division by approximately 500 positions during Q4 and Q1 2012. It said most of the cuts would be primarily outside the German market. Deutsche Bank will publish its third quarter 2011 results on 25 October.
The bank, however, still expects to be profitable in the third quarter and anticipates that its "classic banking businesses" (Private Clients and Asset Management and Global Transaction Banking) will deliver their "best pre-tax profit ever".
Sales and trading, which is one of the largest businesses within CB&S, makes up more than 30% of Deutsche Bank's share price, according to Trefis, which publishes details of the different businesses that drive the stock price of major companies.
Private and business client (23.8%) and Global Transaction Banking (21.3%) make up the second and third largest components of Deutsche Bank's stock price, according to Trefis data.
Date Posted:4th October 2011