You might think there'd be some mild hysteria at Deutsche Bank's New York office on 60 Wall Street this week. After all, the bank's new strategy, summed up in yesterday's press release, clearly positions the Wall Street office at the forefront of a restructuring which could see Deutsche shed €500m of revenues from the investment bank, plus related jobs, as soon as possible. To make matters worse, both the Financial Times and Reuters say Deutsche fired 300 U.S. bankers on Wednesday and plans to fire another 100 by the end of next week. The New York Times says Deutsche has "abandoned" its U.S. ambitions. Bloomberg says it's "cut" its Wall Street ambition to focus on Europe.
If the U.S. is suddenly being marginalized, however, the people we spoke to at Deutsche Bank's Wall Street office don't seem to be feeling it. This is partly because cuts have been gradual and ongoing and are therefore nothing new. It's also because 400 people out of 10,000 (DB's total headcount in the U.S) are not really very many.
"There's much less drama here than the press are making out," says one DB managing director (MD) in the Wall Street office. "All of these businesses were being run down already, so there are no surprises to insiders here. The profitable parts of the business are unfazed and rational about what's going on. The rest understand the logic."
So what is going on? Deutsche declined to comment for this article, but the bank said yesterday that it plans to: "scale back activities in U.S. Rates sales and trading," whilst, "shrinking the balance sheet, leverage exposure and repo financing;" to refocus U.S. and Asian corporate finance on sectors relevant to European clients; to pull back from marginal prime finance clients; and to review the global equities business.
In practice, Deutsche Bank staff in the U.S. says this has already played out as layoffs on the repo desk and in pass-through mortgage-backed securities trading. There are rumours too of redundancies away from Wall Street as Deutsche cuts in Latin America - although this has been going on for years. Most interestingly, Deutsche's U.S. swaps traders are reportedly being given the opportunity to move to London. This makes sense: while the U.S. rates desk is being scaled back, DB said yesterday that it plans to invest in the rates business in Europe.
Even so, if 300 layoffs were made at Deutsche's U.S. business on Wednesday, they don't seem to have registered with the bank's U.S. staff. "A lot of the cuts seem to have been in cash equities," said one (equities) trader: "Everyone here's just waiting for a bit more clarity." Another said DB's layoffs weren't news: "Every big company does this."
If anything, there seems more gloom at DB in London than in the U.S following Sewing's strategy announcement. One London banker said a, "collective depression," has descended and that a lot of people look like, "deer in the headlights," as senior staff seek to assign blame for the recent bad quarter. It doesn't help that Sewing has also promised to trim the top Deutsche ranks globally.
"It's the younger people and the middle office guys who seem the most petrified," he said. "I'm just trying to keep my clients happy."
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