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Deutsche Bank has fired 111 senior managers in its retail and private wealth unit as the division implements deep cost cuts to meet stretching 2025 targets.
The Frankfurt-based bank is seeking to reduce the unit’s cost-to-income ratio from 80 per cent this time last year, to between 60 and 65 per cent next year. Over the first nine months of 2024, it stood at 77 per cent.
Claudio de Sanctis, who took charge of the unit in the middle of 2023, said that meeting the cost-income target would require more work “but I am firmly committed to it”.
Hitting the target will require not only further cost cuts but also revenue growth “in all our business lines”, de Sanctis added.
Deutsche Bank’s private bank, which includes its mass-market retail unit in Germany and the wealth management arm, generates 31 per cent of the lender’s revenue but only 23 per cent of its profit.
It has for years been marked out as an underperforming division that failed to earn its cost of capital and irked clients and regulators with a botched IT migration.
Turning around the unit is one of the cornerstones of Deutsche chief executive Christian Sewing’s strategy.
Sewing was a veteran of the division, serving as its co-head until 2018. De Sanctis’s two predecessors were both replaced after failing to deliver on goals for costs and profitability.
De Sanctis, a former Credit Suisse banker, is closing more than 300 branches in Germany, has merged three levels of management and reduced the number of front-office employees by 6.5 per cent as he tries to trim expenses.
The focus has been on shedding highly paid senior staff, in particular directors and managing directors. The 111 bankers culled represented 8 per cent of the directors and managing directors in the division.
De Sanctis also axed the bulk of the division’s spending on external consultants. Outlays on external consultants have now fallen by 75 per cent, compared to a 70 per cent estimate this summer, he said.
“I am working hard on all the levers that are under my control,” he said.
The bank will need to start hiring in its wealth management division next year after having been on a cost-cutting mission for four years in a row, De Sanctis said. In particular, the division needed to increase the number of relationship managers who personally advise wealthy clients.
“It was my choice, but in 2024, our cost-cutting in wealth management already was borderline.”