CARY – Deutsche Bank will cut 18,000 jobs and dramatically shrink its investment bank as part of a costly overhaul that marks a retreat from Wall Street after two decades of intense competition with American rivals. Whether the cuts will affect the bank’s operations in Cary is unclear.

The German bank said Sunday that it would shutter its equities sales and trading business, while creating a “bad bank” for €74 billion ($83 billion) in assets that eat up too much capital.

When complete, the job cuts are to reduce the workforce to 74,000. The bank would not say where the cuts would fall; many of its investment banking activities are carried out in New York and London.

Some 900 people work at the Cary outpost, which focuses on software development, and jobs are available there according to web sites and Glassdoor.

Deutsch Bank bases its software and applications development group in Cary. Last fall it received a two-year extension from the state of North Carolina for an incentives agreement that it had agreed to based on plans to add 250 jobs at its operations. Deutsche Bank cited “changing business conditions.” The firm had announced plans to add jobs in 2015

Deutsche Bank, which has big operation in Cary, mulls major changes

However, in a letter to employees explaining the bank’s moves, CEO Christian Sewing said technology remains a priority for the bank.

“We intend to invest 13 billion euros in technology by 2022. In addition, we will have a Management Board member responsible for digitalization, data and innovation,” he said.

The bank also is hiring a new executive to lead its technology efforts. “[R]esponsible for digitalization, data and innovation [effective Sept. 1]. Berndf Leukert has been a member of the Management Board of SAP SE since 2014,” the bank said.

“He brings 25 years of experience in product development at the leading German software firm. His appointment reflects the strong commitment of Deutsche Bank to significantly improve its IT both to become more efficient and to drive innovation.”

In the post, Sewing noted:  “With Bernd Leukert, we will be joined by someone who was previously in charge of product development at SAP. In the age of cloud-computing and platform economies, he will ensure that we accelerate our progress still further. In doing so, we can build on the many innovations that our bank has developed over the past couple of years.”

A “restart”

In the restructuring announcement, Sewing said the changes represent “the most fundamental transformation of Deutsche Bank in decades,”  calling the moves a “restart.”

It’s a dramatic shift for the 149-year-old bank, a pillar of European finance that has struggled to produce consistent profits despite undergoing a series of overhauls.

Deutsche Bank said the job reductions would be made by 2022, bringing its headcount down to roughly 74,000 employees.

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For years, Deutsche Bank has struggled with regulatory penalties and fines, weak profits, high costs and a falling share price. The bank went three straight years without turning an annual profit before recording positive earnings of 341 million euros for 2018. CEO Christian Sewing took over last year and promised faster restructuring after predecessor John Cryan was perceived to have moved too slowly.

Deutsche Bank shares rose 2.5 percent on Friday to 7.18 euros as markets anticipated a restructuring announcement. That is far below levels from mid-2015, when the shares traded over 30 euros per share. Shareholders received a dividend of only 11 cents per share for 2017 and 2018.

The bank said one-time charges from the changes would mean a net loss of 2.8 billion euros in the second quarter. Excluding the charges, net profit would have been about 120 million euros.

The restructuring follows the failure in April of merger talks with German rival Commerzbank. Deutsche Bank said the combination would not make business sense, but that left open the question of what strategy the bank could pursue to make its business leaner and more profitable.

As part of the restructuring the bank said it would create a separate unit to dispose of billions in investments that are less profitable or no longer fit its strategy. The bank said it did not expect to have to raise additional capital from shareholders.