CARY – In news that could hit hundreds of people employed in Cary, Deutsche Bank is retreating from Wall Street and making “painful” jobs cuts in its investment bank and US operations after reporting a slump in profits.
Germany’s biggest bank said net profit fell by 79% to $146 million in the first quarter of the year.
In a statement, Deutsche Bank said it would focus investment banking on serving its core European client base, reducing its commitment to the United States and Asia, and review its global equities business. It said it would scale back in areas where it “no longer has a competitive advantage.”
Deutsche Bank would not discuss what impact there might be on the Cary site.
“On the record, we decline to comment,” a spokesperson for the company told WRAL TechWire.
A spokesperson for the N.C. Department of Commerce said no so-called WARN notice had been received about any layoffs.
Deutsche Bank will retain a presence in the United States, but scale back operations such as trading and providing services to hedge funds, The New York Times reported. Instead, in the first major shift by Christian Sewing, who was this month appointed the bank’s third chief executive in three years, it will concentrate on European clients.
“This is not an exit from the U.S. business,” Sewing insisted during a conference call with analysts on Thursday.
As of 2017, the bank employed some 900 people at its Cary operation that focuses on software applications.
As of Thursday morning, job site Indeed.com shows four open positions for Deutsche Bank in Cary.
Job cuts begin
Reuters reported that the bank fired 300 investment bankers in the U.S. on Wednesday.
Frankfurter Allgemeine Zeitung, a German newspaper, reported that the bank plans to cut more than 1,000 jobs in the US.
The bank declined to comment on the figure, according to Reuters.
Deutsche Bank had announced plans to expand by 250 jobs in Cary but froze that decision after the passage of North Carolina’s “bathroom bill,” or HB2. The Germany-based firm later decided to add those jobs in Florida.
In September 2015, the bank announced its plan to add the 250 jobs through 2017 and invest $9 million there through the end of this year. North Carolina agreed to provide about $3.3 million in incentives for the expansion.
Co-Chief Executive Officer John Cryan at that time said, “We take our commitment to building inclusive work environments seriously. We’re proud of our operations and employees in Cary and regret that as a result of this legislation we are unwilling to include North Carolina in our US expansion plans for now. We very much hope that we can re-visit our plans to grow this location in the near future.”
The head of Deutsche Bank said looming cuts “will be painful.”
“These actions will involve cost reductions,” Sewing said. “These cutbacks will be painful, but they are unfortunately unavoidable if we want to be sustainably profitable in the best interests of our bank, our clients and our investors.”
Shares in Deutsche Bank plunged as much as 3.7% in Frankfurt, but the losses had been erased by mid-morning.
The German bank announced earlier this month that former chief executive John Cryan would leave after failing to turn an annual profit during a tenure that lasted under three years.
The decision to oust Cryan reflected investors’ concerns about the pace of a turnaround strategy that included closing hundreds of bank branches in recent years and eliminating tens of thousands of jobs.
Sewing, who joined the lender as a teenager and most recently led its retail banking division, made clear that he would accelerate changes to the bank’s structure and strategy.
He has said the lender must do more to control costs, while focusing on retail banking and wealthy private clients in Europe. The bank will cut layers of management, and shrink the size of its executive board.
Sewing said that job cuts, which will be focused on the investment bank, would be made over the course of 2018.
“Even a quick look at the figures makes one thing clear: we have to take action – fast,” said Sewing.
Read the CEO’s entire statement online.