Deutsche Bank will navigate the narrow path between its promises to shareholders to cut costs integrating its Postbank unit into existing retail banking operations and promises to its workers to avoid layoffs until the middle of 2021 by offering a voluntary buyout program to cut about a thousand employees.
The offer of early retirement or severance won’t come cheap, but Deutsche hopes to realize savings of €900 million ($1.07 billion) by cutting back duplication, sharing infrastructure and combining the two building societies, BHW and Deutsche Bauspar. The buyout offer will remain open until the end of October. According to sources in financial circles, the bank hopes that about two-thirds of the voluntary terminations will come through early retirement and one-third through severance packages. Some 750 are targeted for Postbank, and the rest at the parent bank.
Deutsche Bank confirmed the buyout program without providing any details. “The voluntary program should help to leverage the cost synergies,” a bank spokeswoman said. Some 31,000 are currently employed in the two operations. The buyout program, which was launched on Monday, has already met with high demand, sources said.
“I would always favor a voluntary program over involuntary terminations.”
Integration of the two retail operations is part of a long-term restructuring being undertaken by Germany’s largest bank to streamline operations, cut costs, and to refocus its efforts on the German market. It follows a period of international expansion and ambitions to become a global investment banks, a strategy that resulted not only in heavy losses but in a clutch of illegal activities costing billions to settle and bringing the bank close to failure.
The program was agreed to by the unions, the bank spokeswoman said. “It is the right path,” said Stephan Szukalski, head of the DBV union. “I would always favor a voluntary program over involuntary terminations.” Postbank was created by the demerger of postal savings operations from Deutsche Post and spun off to the public. Deutsche Bank completed its acquisition of the unit in 2012, but has wrestled since then with what to do with it. Reductions in the workforce are nothing new for the unit, which has lost an average 500 workers annually over the past 10 years.
Handelsblatt also learned that Postbank’s chief financial officer, Marc Hess, will leave the bank at the end of March. Mr. Hess managed the 2004 initial public offering of the bank and has been CFO for the past 11 years. Otherwise, Deutsche is emphasizing continuity and will keep the current managers of both retail operations in place.
Yasmin Osman covers banking for Handelsblatt in Frankfurt. Darrell Delamaide adapted this article into English for Handelsblatt Global. To contact the author: firstname.lastname@example.org.