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Deutsche Bank AG’s massive reorganization will leave thousands of finance employees out of work. And with firms throughout the industry running lean, they won’t all find jobs easily.
The German lender’s sweeping turnaround plan, including an exit from the equities sales and trading business, will slash Deutsche Bank’s workforce by about 18,000 employees globally. Workers from Sydney to London to New York received the details of their exit packages Monday — and were left pondering their next move.
“There will be roles for these folks, but it won’t be for everyone, unfortunately,” said Noah Schwarz, a senior client partner at executive-search firm Korn Ferry, who predicted that U.S., Canadian and Japanese banks are among the places former Deutsche Bank employees may end up. “Some of these bankers will have to reinvent themselves.”Hundreds of thousands of jobs have disappeared from the global finance industry since the 2008 crisis, and some of the biggest banks haven’t stopped cutting. Automation and new technology have been replacing workers while reduced risk-taking has trimmed demand in areas such as structured finance. Front-office headcount for investment banking and trading fell for a fifth year in 2018, according to Coalition Development Ltd. data. And hedge funds, which used to poach employees from Deutsche Bank’s equities business, have cut back in recent years.
That doesn’t mean there aren’t opportunities for those shown the door at Deutsche Bank.
Some traders may end up at family offices — investment vehicles for the ultra-wealthy that have been taking employees from Wall Street firms, Schwarz said. Investment bankers may be helped by hiring at boutique firms such as Evercore Inc. And Goldman Sachs Group Inc. has been more aggressive in looking beyond its walls for senior-level hires in the past year, while JPMorgan Chase & Co. and BNP Paribas SA have almost reversed all their post-crisis job cuts.
“Goldman has openly been recruiting,” said Schwarz, who once worked at the firm. “That’s been a fundamental change. It tells you that this is a fluid jobs market, and there will be more movement in the months and probably the year or two to come.”
That movement’s already been happening, with some Deutsche Bank executives leaving before it announced its restructuring Sunday. Those who have departed in recent months include Mark Hantho, a top equities capital markets banker, and private equity dealmaker John Eydenberg. They’re both going to Citigroup Inc.
Many leaving Deutsche Bank will find it harder to locate their next position. Thousands of the cuts are in the equities trading business Deutsche Bank is eliminating — and that’s an area hit particularly hard by automation. For example, Goldman’s chief executive officer said last year that his firm’s stock-trading unit had three people doing the job once done by 500.
“A lot of the people coming out of DB are going to be very challenged to find jobs just because of the sheer change in the equity business,” said Michael Nelson, a senior recruiter at Quest Group. “When you are dispersing that many people globally, some of those people might have to leave the business.”
For those who are able to land a job, a smaller paycheck may be in the offing. Deutsche Bank had more than 1,100 material risk takers in its investment bank that earned $1.25 million on average last year, with almost 60% of that coming in salary, according to the company’s annual compensation report.
“A lot of these people are going to have to get used to less compensation,” Richard Lipstein, managing director in the financial-services practice at recruiting firm Gilbert Tweed International, said in a telephone interview. Also, “the percentage of compensation in cash is lower than it used to be.”
Across the Atlantic, the Deutsche Bank cuts come during a gloomy summer for financial jobs in the U.K. capital, as Brexit collides with beleaguered investment-banking returns to produce thousands of redundancies.
“It’s a bad time to be looking for a job with the normal summer lull and generally poor market conditions,” said Joseph Leung, managing partner at Aubreck Leung, a London financial-services executive-search firm. “That said, the Deutsche people could be attractive as they are effectively free agents — they will likely be getting their stock and won’t have any notice period, so can start straightaway.”— With assistance by Sridhar Natarajan, Jennifer Surane, Stefania Spezzati, Yalman Onaran, Alix Steel, and David Westin