Frankfurt – based Deutsche Bank AG DB plans to conduct 100 layoffs in most of its divisions in Russia, according to Bloomberg. The retrenchment follows reduction in deals due to an economic meltdown in Russia. Notably, trading and advisory work in Russia has gone down for Deutsche Bank.
Further, the situation has worsened in Russia due to a slump in crude oil prices as the country is the largest exporter of the same. Therefore, the Russian economy is bearing the brunt of reduction in international operations and high interest rates. Notably, Deutsche Bank earned around $1 million annually through May 31 as an advisor on Russian mergers and securities sales as compared with $16 million in the year-ago period.
The bank said in a statement, “We continue to service clients and facilitate international investment in the local economy through our businesses in Russia.” Notably, Deutsche Bank’s Russian operations include two technology centers in Moscow and St. Petersburg.
Deutsche Bank is diligently working to meet its long-term goals. The bank intends to change its operating model to achieve higher efficiency, reduction in complexity, better resilience and resolvability. The company aims to achieve annual gross savings of €3.5 billion by 2020. Of these, the company intends to realize around 60% via efficiency improvements through digitization, infrastructure adjustments and other measures. The remaining 40% is expected to be realized from streamlining operations by offloading unprofitable businesses, focusing on geographic footprint and branch closures.
To achieve the savings, the company expects one-time costs of €3.7 billion. Through its existing Operational Excellence program the company intends to deliver savings of €1.2 billion by the end of 2015.
In the current market scenario, many banks are finding it difficult to cope with the volatile conditions, interest rate uncertainty and regulatory landscape in which the scope for revenue growth is limited. Hence, the banks are resorting to extreme cost-cutting measures comprising layoffs and closure of business units worldwide.
Currently, Deutsche Bank carries a Zacks Rank #3 (Hold). Some better-ranked foreign banks worth considering include Sumitomo Mitsui Financial Group, Inc. SMFG, HSBC Holdings plc HSBC and BBVA Banco Frances S.A. BFR. All three carry a Zacks Rank #1 (Strong Buy).
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