Germany's largest bank, Deutsche Bank, has revealed that more job cuts are on the way in 2005 to add to the 1,920 losses announced last year. In total 6,400 positions will be cut, while 1,200 new jobs will be created in lower cost locations.
In the fourth quarter, Deutsche Bank launched its business realignment program, which covers a series of initiatives aimed at achieving revenue growth and cost efficiency. Due to the program, it is expected that 6,400 full-time jobs will be cut by the end of 2005.
Of these 1,600 are covered by the restructuring and severance charges in the fourth quarter 2004. Restructuring charges for the remaining 4,800 will be taken in 2005. However, additional efficiency measures including smartsourcing (namely, transferring jobs to lower cost locations) will add 1,200 new employees, meaning the net reduction in the workforce will be 5,200.
Total expenses related to the business realignment program, and other efficiency measures recorded in the fourth quarter 2004 and expected in 2005, are estimated to be E1.3 billion. The bank expects to reduce its operating cost base by E1.2 billion in 2005, of which E0.8 billion will relate to the business realignment program.
The revelation of extended job losses comes as the bank reported its fourth quarter 2004 profits were down by around a third compared to the previous year, due to extensive restructuring charges.
Income before income taxes for the fourth quarter 2004 was E418 million, after reorganization charges of E574 million. These charges included restructuring expenses of E400 million, related to the bank’s business realignment program, and E174 million related to additional efficiency measures. In the prior year fourth quarter, income before income taxes was E676 million.
Meanwhile, pre-tax profits for the year had doubled to E4.1 billion.