Deutsche Bank AG DB is reportedly hiring 100 people in a bid to boost equities trading business while shifting focus from capital-intensive bond-trading operations. The news, first reported by Reuters last week, stated that the hiring process has commenced.
The addition of staff will enhance business in the U.S., Europe and Asia and its entire product groups. With focus on technology and electronic trading, the hiring also includes positions at the bank’s prime finance unit that provides services to hedge funds.
Notably, during 2015, Deutsche Bank’s net revenue from equity sales & trading were €3.1 billion, reflecting an increase of 6% year over year. Though driven by increased client balances prime finance revenues were considerably higher, equity derivatives revenues declined significantly due to lower client activity and a challenging risk management scenario in the second half of the year. Equity Trading revenues, however, were at par with the prior year.
Though the addition of employees seems to be in line with the bank’s efforts to tap growth opportunities, Deutsche Bank is dismissing thousands of employees and scaling back global operations at the same time as the bank’s Co-Chief Executive Officer (CEO), John Cryan is expediting efforts to revamp the bank to boost profitability. Notably, last October, the bank announced a plan to cut nearly 35,000 jobs as part of its restructuring overhaul.
Cryan, who succeeded co-CEO Anshu Jain last June, assumed the task of executing the bank’s “Strategy 2020” which was unveiled in Apr 2015. The new strategy underlines several measures including initiatives to reposition Investment Banking, reorganize retail business and trim down the geographic footprint, with the aim of achieving net savings of €1–1.5 billion by 2018.
Global investment banks are currently facing revenue pressure as issues including market turmoil, volatility in commodity prices, slowdown of emerging markets and concerns over the Chinese economy continue to affect business and client activity levels as well as market volumes. Stricter regulations and declining fixed income trading have forced banks to reduce cost through job cuts and compensation reduction.
According to Dealogic data, which recently released its preliminary investment banking review for first-quarter 2016, global investment banking revenues in the quarter declined 36% year over year to $12.8 billion. Notably, among the top ten global investment banks, Deutsche Bank ranked seventh, while JPMorgan Chase & Co. JPM was listed at the top for first-quarter 2016.
As restructuring has lately been the core agenda for almost every global bank, last week Swiss banking giant Credit Suisse Group AG CS announced elimination of additional 2,000 jobs in its Global Markets unit, raising the total number of job cuts this year to 6,000. The company expects the unit to witness revenue decline of as much as 45% in first-quarter 2016.
Further Japanese brokerage giant, Nomura Holdings, Inc. NMR is contemplating to lay off around 20% percent of its employees in North America, per a Bloomberg report.
Deutsche Bank currently carries a Zacks Rank #5 (Strong Sell).
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