Germany’s struggling Deutsche Bank said Sunday it would cut 18,000 jobs by 2022, downsizing its volatile investment banking division in a restructuring aimed at restoring consistent profitability and better returns to shareholders.
The Frankfurt-headquartered bank said it would cut roughly a quarter of its total annual costs, from 22.8 billion euros ($25.6 billion) last year to 17 billion euros, through steps such as dropping the investment bank’s stock-trading business.
It also plans to slim the division focused on fixed-income investments.
The aim is to focus on areas where the bank is among market leaders, and on businesses with steadier earnings such as serving corporate customers.
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.
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.
Shares fell 6.1% Monday on the news.
Stocks drop as traders weigh odds of steep rate cut
Technology and health care companies drove U.S. stocks to a lower finish Monday as the market fell for a second straight day following a run of record highs.
The selling came amid growing speculation on Wall Street that an unexpectedly strong pickup in U.S. employment growth last month may keep the Federal Reserve from aggressively cutting its benchmark interest rate. Many investors still expect a cut of a quarter percentage point, but fewer are now expecting a half-point reduction.
The S&P 500 fell 14.46 points, or 0.5%, to 2,975.95. The index is now about 0.7% below its all-time high set Wednesday.
The Dow Jones Industrial Average slid 115.98 points, or 0.4%, to 26,806.14. The Nasdaq composite lost 63.41 points, or 0.8%, to 8,098.38. The Russell 2000 index of smaller company stocks dropped 14.24 points, or 0.9%, to 1,561.39.
The Fed’s benchmark interest rate currently stands in a range of 2.25% to 2.5% and the central bank has not cut rates since the Great Recession in 2008. Last year, Fed officials raised rates four times, in part to stave off the risk of high inflation and in part to try to ensure that they would have room to cut rates if the economy stumbled.
Technology and health care stocks led the market’s slide Monday. Apple dropped 2.1% and Cardinal Health slid 1.5%. Communication services companies also declined broadly. Google parent Alphabet fell 1.4% and TripAdvisor lost 4.3%.
Bond prices fell, shedding early gains. That sent the yield on the 10-year Treasury note to 2.05% from 2.04% late Friday. Bond yields fell through much of June as investors’ expectations of a Fed rate cut increased.
Benchmark crude oil rose 15 cents to settle at $57.66 a barrel. Brent crude oil, the international standard, fell 12 cents to close at $64.11 a barrel.