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‘It’s a restart’: Why Deutsche Bank is slashing over 18,000 jobs

Germany's biggest lender Deutsche Bank said Sunday it would cut 18,000 jobs by 2022, as the former leading light of the country's financial sector looks to escape years of turmoil.

Published: 8 July 2019 08:39 CEST
'It's a restart': Why Deutsche Bank is slashing over 18,000 jobs
Shareholders at Deutsche Bank's annual meeting at its Frankfurt headquarters in May. Photo: DPA

The slashing of around one in five of its workforce, to 74,000 employees, is an unprecedented round of departures for Deutsche.

The bank said the layoffs would reduce annual costs by €6 billion euros over the same period.

“Today we have announced the most fundamental transformation of Deutsche Bank in decades,” chief executive Christian Sewing said, dubbing the scheme “a restart for Deutsche Bank”.

The lender did not immediately make clear where the axe would fall.

But with executives looking to find synergies in the integration of subsidiary Postbank and central infrastructure roles, many jobs are likely to go in home country Germany.

The new round of job cuts comes on top of some 6,000 already carried out over the past year.

Bosses expect the restructuring plan to sap second-quarter results by some three billion euros this year, making for a net loss of 2.8 billion.

Over the whole year, Deutsche is likely to plunge back into the red after a brief flirtation with profitability in 2018.

The bank does not plan to pay out dividends this year or next.

Last chance?

The restructuring could be a last chance for Deutsche after much-hyped merger talks with crosstown rival Commerzbank fell through earlier this year.

Negotiations collapsed despite the backing of the finance ministry in Berlin, which feared seeing a vital link in the financing of the country's economy bought up from abroad.

SEE ALSO: '10,000 jobs in grave danger': Unions warn of Deutsche-Commerzbank merger

Over the past four years, the firm's market capitalization has fallen by 75 percent, making it a potential target for takeovers by bigger fish.

As markets closed Friday, Deutsche was worth €15 billion, placing it firmly at the back of the pack in a European industry dominated by the likes of HSBC (€165 billion euros), Spain's Banco Santander (€69 billion) and France's BNP Paribas (€54 billion).

“Deutsche plays in the first division, and should lay the foundations for things to stay that way” over the weekend, urged economy minister Peter Altmaier in the tabloid-style Bild's Sunday edition.

Since he took the helm in early 2018, Sewing has attempted to refocus the sprawling group on stable revenue-generating business areas, including retail banking and so-called transaction banking for businesses.

Meanwhile Deutsche's focus has shifted from its attempt to compete with US-based global giants back to its home turf of Germany and Europe.

Investment banking burned

In particular, tough cuts to the former flagship investment banking unit have been on the agenda since May.

Sunday's announcements target the once-proud division.

Deutsche will stop almost all share trading activity, and is in talks with France's BNP Paribas to sell off some of its business and staff in the field.

On Friday, Garth Ritchie, the head of Deutsche's South African investment banking unit, was first out of the door.

The unit's business had fallen back by 20 percent in the first quarter of 2018 alone, and it was no longer bringing in the fat profits of former years.

Especially in the US, it was for years plagued by lawsuits and scandals, including some linked to the so-called “Panama Papers” leak of sensitive documents about offshore dealings.

SEE ALSO: German police raid Deutsche Bank in 'Panama Papers' graft probe

On top of the rank-and-file cuts, Deutsche is also rebuilding its board, sending away compliance chief Sylvie Matherat and two other executives.

The group will also create a so-called “bad bank” unit to host some €74 billion of low-quality assets, notably those linked to derivatives transactions — highly speculative financial products.

Deutsche's woes are a microcosm of a struggling German banking sector that was once widely envied.

Last year, more than 32,000 jobs were cut in the industry, or 5.4 percent of the total workforce of 565,000, according to Barkow Consulting figures.

Bosses complain that low interest rates in the eurozone, sluggish economic growth and competition from new online platforms are sapping their performance.

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WORKING IN GERMANY

Five things to know about salaries in Germany

Finding a job is typically a top priority when planning a move to Germany. The country boasts the third largest economy in the world and a continuing need for skilled professionals. 

Published: 2 May 2024 12:26 CEST
Five things to know about salaries in Germany

If you are moving to Germany, you might soon start looking for a job in the country. However, like many other aspects of living abroad, there are several cultural differences and specificities when it comes to job hunting in Germany – especially when it comes to salaries.

Here are five things to know about salaries in Germany.

There is a minimum wage in Germany

Germany’s minimum wage of €12.41 per hour, pre-tax came into effect at the start of this year. This amounts to a monthly salary of €2,054 which ranks ninth in the world. The minimum wage will rise again in 2025 to €12.82 per hour before tax deductions.

There have been calls recently to hike the salary up higher to €14 per hour.

READ ALSO: Millions of workers in Germany ‘earning less than €14 per hour’

Find out salary expectations

Germany does not require companies to list salary ranges for listed positions. But that may be changing soon. The EU parliament passed a wage transparency law to require companies to publish annual reports detailing wage and wage discrepancy information. The rules, which are set to go into effect in 2027, are intended to help close the gender pay gap. 

In the meantime, employees can utilise online resources to find industry averages and expectations for different roles:

  • Gehalt.de offers users access to salary information on more than 800 professions
  • Online platform, Kununu provides compensation information and employer reviews to users in the DACH region  
  • Berlin residents can utilise REDSOFA’s salary survey for an overview of salary averages in the country’s capital city

As of April 2023 the average gross monthly salary was €4,323 according to Germany’s Federal Statistical Office.

Two-thirds of full time workers make less than this average monthly salary and one-third of workers earn more than this average monthly salary.

While wages after deductions may be less than similar roles in other countries, it is also important to take into consideration what other benefits come with a salary. Paid holiday leave, pension contributions, long notice periods and annual bonuses can help make up some of that difference. 

READ ALSO: How much do employees in Germany typically earn?

Check your payment schedule

Internationals can usually expect their salary once a month when working in Germany. Many German companies choose to pay employees either on the 1st or 15th of the month. It is also important to note that most employees can expect to receive their first pay check within 30 or 45 days of starting. 

For positions that offer yearly bonuses, these payments are included in a 13th pay check which are subject to income tax.  

A person works on a laptop.

A person works on a laptop. Image by Bartek Zakrzewski from Pixabay

How many hours do you work?

When looking for a job, don’t forget to check how many hours you can expect. Job descriptions will include expectations for time commitments. 

Mini-jobs, as expected from the name, are limited in hours and pay. Employees can expect up to €538 per month. Mini-jobs do not provide social security because they do not require social security contributions. Employees are also not automatically covered by health and nursing care insurance. 

Teilzeit, or part time jobs, are defined as any job where working hours are less than a full time position.

A common misconception is that part-time work requires working 20 hours or less a week. But an employee working five days a week for 30 hours, at a position that is typically 40 hours when full time can also be defined as a part time worker. 

READ ALSO: The rules in Germany around ‘mini’ and ‘midi jobs’

In fact, Germany has a term for workers who work between 28 and 36 hours a week. Vollzeitnahe Teilzeit, or nearly full time part time workers, can be a popular choice for some people, including parents. These positions can give employees more flexibility to balance work and family responsibilities. It is important to note that these workers are paid according to their time worked, so it will still amount to less than full time.

Depending on the work schedule, part time employees can earn the same amount of vacation as their full-time counterparts. That’s because holiday leave is calculated based on days worked, not hours. If a part time worker comes in five days a week, they will be eligible for at least 20 days of holiday. If that same part time worker comes in three days a week, they will be legally entitled to twelve days of vacation, even if they worked the same hours as the other employee. 

In most companies, weekly working hours between 35 and 40 hours are considered full-time employment or Vollzeitbeschäftigung. 

Watch out for the gross v. net difference

Before you sign the dotted line, it will be important to check how much of your gross salary you’ll be able to keep come pay day. Companies that include salary expectations in descriptions include gross salary (Bruttoeinkommen) – not the net income after taxes and deductions (Nettoeinkommen). The amount deducted will depend on how much you earn, the tax class you’re in and on other factors such as how much you’re paying for healthcare but it is usually around 40 percent. 

Salaried employees can find information on the deductions on their pay slip. Some to expect to see include:

  • Taxes are deducted directly from the gross pay. The amount is based on the tax bracket your salary falls within 
  • A percentage of your gross salary is also deducted for your pension / retirement contributions
  • Church taxes between eight and nine percent of your salary will also be due if you are affiliated with a religion
  • Unemployment insurance amounts to a 2.5 percent deduction from your gross salary. It is important to note that the insurance covers a salary up to €90,600 
  • Health insurance contribution rates are typically split between employers and employees. The rate depends on the provider. In 2024, the TK contribution rate to health insurance is 15.8 percent of the gross income

READ ALSO: What you need to know about your payslip in Germany 

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