Deutsche Bank (NYSE:DB) said it will axe 1,900 jobs as part of ongoing restructuring efforts that it hopes will slash about 3 billion euros ($3.67 billion) from its annual expenses and stem bleeding profits.
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The additional job cuts, which come on top of hundreds announced since last year, are in response to financial turmoil in Europe that has weighed on investment activity.
They are a signal that the bank, which in April said it saw no need for additional cuts in its investment bank, is struggling amid the debt crisis that caused its profit last quarter to fall 46%.
The bank will cut about 1,500 jobs in corporate banking and security units located mostly outside of Germany. The reduced headcount is expected to save about 350 million euros. The bank also said it is reviewing compensation.
Another 500 million euros will be saved by the previously announced integration of Postbank, Deutsche Bank said.
The turnaround efforts mark the first strategic decision of newly appointed co-chief executives, Anshu Jain and Jeurgen Fitschen. While Deutsche Bank didn’t provide specific figures, it said there will be “substantial cost to achieve these savings.”
In a statement, the Frankfurt-based bank said the cost-reduction measures will includes changes to the business and revenue model as well as the introduction of a re-engineering program aimed at “achieving world-class operating performance with flexibility, quality and robust controls.”
As part of efforts to improve its capital position, Deutsche Bank has identified an additional 29 billion euros of risk-weighted asset reduction and capital building measures. The bank said it will implement a wide range of measures to further reduce risk and build capital organically.
Deutsche Bank still expects its core Tier 1 ratio to be about 9%, equivalent to 7.2% on a fully loaded basis, at the beginning of 2013. But by the end of the first quarter, it plans to have a Basel 3 core Tier 1 ratio of about 10%, equivalent to at least 8% on a fully loaded basis.
“The bank further aims to continue to grow this ratio through the rest of 2013 and beyond,” Deutsche Bank said in a statement, adding that it “aims to apply all capital levers at its disposal before considering raising equity from investors.”
Shares of Deutsche Bank ticked higher Tuesday morning on the announcement despite disappointing second-quarter earnings.
Deutsche Bank said earnings fell 46% during its latest period as the bank’s investment banking and trading activity took a hit from ongoing economic turmoil in the eurozone.
The financial services giant said earnings fell to 661 million euros from 1.233 billion euros a year ago and revenues slumped by 6% to 8 billion euros.
Co-chiefs Jain and Fitschen blamed the European sovereign debt crisis, which they said “continues to weigh on investor confidence and client avidity across the bank.”