announced the dismissal of 111 senior managers in its retail and private wealth management unit as part of an effort to implement deep cost cuts and meet challenging targets for 2025. The information is from the British newspaper Financial Times.
The Frankfurt-based financial institution seeks to reduce the unit’s cost/revenue ratio, which was 80% last year, to between 60% and 65% next year. In the first nine months of 2024, this ratio was at 77%.
Claudio de Sanctis, who took over leadership of the unit in mid-2023, stated that reaching the cost/revenue target will require more work, but he is “firmly committed” to the objective, according to the newspaper. De Sanctis highlighted that, to achieve this goal, it will be necessary not only to cut even more costs, but also to seek revenue growth in all of the unit’s business lines.
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According to the FTthe unit of private banking of Deutsche Bank, which includes the mass retail segment in Germany and the wealth management area, represents 31% of the bank’s revenue but only 23% of its profit. This division has been considered an underperforming area, unable to generate a return on capital and angering customers and regulators due to a poorly executed IT migration.
Restructuring the unit is one of the pillars of the strategy of Deutsche Bank CEO Christian Sewing, who was co-head of the division until 2018. De Sanctis’s two predecessors were replaced after failing to meet cost and profitability targets. De Sanctis, a former Credit Suisse banker, is closing more than 300 branches in Germany, merging three levels of management and reducing the number of frontline staff by 6.5% to try to cut expenses.
The focus of the restructuring is on eliminating well-paid senior employees, especially directors and general managers. The 111 jobs cut — which did not include all customer-facing positions — represented 8 percent of the division’s directors and general managers. Additionally, De Sanctis significantly reduced spending on external consultants, which fell by 75% compared to an estimate of 70% last year.
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De Sanctis also indicated that the bank will need to start hiring in its wealth management division next year after four consecutive years of cost cuts. In particular, the division needs to increase the number of relationship managers who personally serve wealthy clients.
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