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Deutsche Bank cuts 1,900 jobs as profits halved

Deutsche Bank, Germany's biggest lender, said on Tuesday that it would slash 1,900 jobs, mainly in its corporate banking and securities division, as the eurozone crisis cut second quarter profits nearly in half.

Deutsche Bank cuts 1,900 jobs as profits halved
Photo: DPA

The bank also acknowledged for the first time that a small number of its employees – but no executive board member – had been involved in the Libor interest-rate rigging scandal that has rocked the financial world.

In view of the current difficult environment, Deutsche Bank said it would “reduce headcount predominantly outside of Germany by approximately 1,900 positions.”

These measures were expected to contribute savings of approximately €350 million of an overall cost-cutting target of €3.0 billion, the statement said.

The news sent Deutsche Bank shares soaring on the Frankfurt stock exchange, where they were showing a gain of 2.39 percent at €25.44 in a slightly firmer market.

Earlier, Deutsche Bank had announced that its net profit fell to €661 million in the second quarter of the year, from €1.2 billion a year earlier, and revenues declined 6.0 percent to €8.0 billion.

The group’s performance “was impacted by a volatile environment. The European sovereign debt crisis continues to weigh on investor confidence and client activity across the bank,” said co-chief executives Jürgen Fitschen and Anshu Jain.

The net profit figure was lower than a provisional estimate of €700 million which had already disappointed analysts when it was released last week.

The fall in profits is fuelling concern whether Deutsche Bank can meet the EU’s more stringent capital requirements without issuing new shares to raise additional funds.

But the bank said it had “always maintained, and currently maintains capital ratios which are comfortably above all regulatory thresholds and plans to continue to do so.”

Deutsche Bank said its core Tier 1 capital ratio – a key measure of financial health – stood at 10.2 percent at the end of the second quarter, up from 10 percent three months earlier and above the 9.0-percent minimum required by regulators.

The firm said it would only seek a capital increase as last resort. “The bank further aims to continue to grow this ratio through the rest of 2013 and beyond. The bank aims to apply all capital levers at its disposal before considering raising equity from investors,” Deutsche Bank said.

In a letter to staff, Deutsche Bank’s supervisory board chief Paul Achleitner also confirmed for the first time that an internal investigation has been launched into the Libor affair.

“As per the current status of investigations, we can say that no current or former member of the management board had any inappropriate involvement,” Achleitner wrote in the letter, a copy of which was obtained by AFP.

“It has also found that a limited number of employees, acting on their own initiative, engaged in conduct that falls short of the bank’s standards, and action has been taken accordingly.”

Co-CEO Jain came under the spotlight over his possible role in the rigging of the Libor interbank rate which underpins rates on a wide range of lending from mortgages to credit cards.

Before his appointment in June, Jain headed Deutsche Bank’s investment banking operations in London where one of its traders was allegedly involved in the scam.

And while it was Jain himself who ordered an internal probe into the affair as far back as 2010, the investigation was initially not pursued with particular intensity, according to recent newspaper reports.

The affair was also one of the reasons Jain’s predecessor Josef Ackermann did not want the 49-year-old investment banker to replace him, the business newspaper Handelslbatt reported recently.

British paper The Financial Times said a Deutsche Bank trader had been formally named as a suspect in the Libor probe.

While Deutsche Bank declined to comment, it did tell AFP that the trader concerned no longer worked for the bank.

British bank Barclays has already been fined £290 million (€360 million) as part of a probe into the scandal by British and US authorities.

AFP/hc

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WORKING IN GERMANY

Which Bavaria-based companies regularly hire English speakers?

Bavaria is no doubt a beautiful state with a strong economy, but can be a hard place for non-German speakers to integrate. The Local takes a look at job opportunities in Germany’s southeastern 'Free State.'

Which Bavaria-based companies regularly hire English speakers?

Munich ranks third in German cities with the highest total GDP, behind Berlin and Hamburg, but in terms of GDP per capita, it’s higher than both of them.

It also consistently ranks high, often highest, in terms of average household income.

As of 2023, nine of the 40 companies listed on DAX, Germany’s stock index, were based in Bavaria. Seven of those are based specifically in Munich.

While Frankfurt is commonly known to be Germany’s business capital, Munich can claim the title of Germany’s insurance capital, which is saying something, as Germany is home to some of the largest insurance firms in the world, like Allianz.

Beyond the state’s capital city, a number of international companies are based elsewhere in Bavaria, particularly in the Franken region, near Nuremberg.

Which companies actively hire English speakers?

Bavaria, and Munich in particular, is home to a number of companies at the forefront of international business. But the state is known for its traditional, sometimes conservative, culture, which affects its business culture as well.

Whereas companies embracing English as their primary business language are easy to find in Berlin, the practice is less common in the south. That said, there are some notable exceptions. 

Sportswear giants, Adidas and Puma, both have their headquarters near Nuremberg in Herzogenaurach, and regularly recruit English speaking international talent.

“As an international company, our teams reflect the rich diversity of our consumers and communities,” Jon Greenhalgh, Senior Manager Media Relations for Adidas told The Local. “Fostering a culture of inclusion where we value and leverage differences, ensures that we can authentically engage with our employees and truly connect with our consumers.”

He added that around 40 per cent of Adidas’ Germany-based employees are foreign nationals, from over 100 different countries.

Siemens and BMW rank among Bavaria’s top employers, and are also known to hire their fair share of foreigners.

“In Germany, we recently had around 2,000 open positions,” Konstanze Somborn told The Local on behalf of Siemens AG.

He added that Siemens operates in 190 countries. “That is why we value international teams very much…English as a common language is very usual.”

READ ALSO: ‘Which German companies want to hire foreigners?’

Similarly, BMW hires workers from a variety of backgrounds. 

“Every year, we hire lots of internationals and welcome them to the BMW Group,” Dr. Hans-Peter Ketterl, a press spokesman for BMW Group told The Local. 

But not all of these positions are available to non-German speakers.

Ketterl added that BMW’s working language is German in the country, even though, “English is an indispensable entry requirement as the second corporate language in many areas of the company.”

Check job boards and follow best practices

If it’s your first time applying for jobs in Germany, make sure to change your resume to the German format, even for English positions.

While Germany is home to its own job boards, like Xing, LinkedIn is probably the best place to start. In addition to searching for positions based in your preferred location, you can check relevant groups, like Munich Startups, to broaden your horizons.

The English Jobs in Germany website is also a good resource to start with. 

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