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Deutsche Bank shares turned negative after initially surging almost 4% on Monday morning when the German lender announced a major restructuring program this weekend. As part of its most aggressive restructuring, the bank will see 18,000 jobs lost by 2022 and the closure of its global equity trading and trading activities to improve profitability.
The bank expects radical reforms, which also involve the creation of a "bad bank" of 74 billion euros, cost 7.4 billion euros. here 2022. The second quarter results being expected on July 25, Deutsche is expected to loss of 2.8 billion euros.
Deutsche Bank Chief Financial Officer James von Moltke told CNBC's Annette Weisbach on Sunday that it would be the latest redesign of the strategy. Its goal is to bring the global workforce to around 74,000 people and reduce adjusted costs to 17 billion euros.
Several sources told CNBC that the layoffs at the bank's offices in New York begin Monday.
The decision of the German bank to reduce its investment banking business comes just two days after the resignation of its director, Garth Ritchie, from a "mutual agreement".
Deutsche shares climbed 16% over the past month, bouncing back to their lowest level in early June after CEO Christian Sewing called for "severe cuts" at a meeting in Paris. Shareholders, controversial. However, the multi-year decline is evident in the stock price at the close on Friday at 7 euros, against 112 euros at their peak before the crisis.
The fall in stock prices reflects the bank's long series of scandals, many of which are related to failures in the fight against money laundering, as well as the failure of merger talks with its rival. local Commerzbank, which may have relaxed the pressure to reduce or eliminate its investment banking business.
About time
Stephen Isaacs, chairman of the Investment Committee at Alvine Capital, told CNBC's "Squawk Box Europe" channel on Monday that he was "about to move into gear." "Deutsche Bank has taken steps to improve its profitability.
"I'm afraid to say that all the other European banks have been confronted with the fact that they can not compete with the Wall Street players – go to UBS, Credit Suisse and even the UK banks – go guys, c & rsquo; It is extraordinary that it has taken so much time, and only in the event of a complete collapse of the stock price and that some of their key clients are moving away, "said Isaacs.
Isaacs said that even if, eventually, the reforms would work for Deutsche Bank, they would be "much more painful" and that "the provisions they talked about are not entirely adequate".
"I'm afraid that all kinds of problems will not be worth it – cutting all these jobs is very expensive, especially in Europe, especially in Germany, it will be very difficult," he said.
"In the end, the strategy of effectively doubling the German business market, at a time when the German economy may really be overturning, is not in itself a key to profitability. . "
Isaacs went so far as to suggest that warring President Paul Achleitner, who survived an ouster attempt at a controversial shareholder meeting in May, should resign in the face of the crisis.
-Annette Weisbach and Spriha Srivastava of the CNBC contributed to this article.
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