Banking giants massively lay off staff

Business is difficult and forecasts are uncertain, large banks save costs by reducing staff and using artificial intelligence.

Deutsche Bank said it is cutting 3,500 jobs, or 4% of its workforce, as part of a plan to cut costs by 2.5 billion euros ($2.7 billion) by 2025. One way it is doing this is by promoting “simplified and automated workflows.” Most of the jobs being cut are in back-office functions.

Deutsche Bank's pretax profit in 2023 will rise 2% from 2022 to 5.7 billion euros ($6.1 billion), its highest in 16 years. However, net profit will fall 14% to 4.9 billion euros ($5.3 billion).

“We have delivered growth that far exceeded our targets, maintaining a focus on cost discipline, while investing in key areas,” said CEO Christian Sewing.

Deutsche Bank is the latest in a string of banks to announce layoffs in recent months to cut costs and boost profits.

UBS is also laying off 3,000 employees in Switzerland, where the bank is headquartered. Similar moves are expected at other branches of the bank.

A Deutsche Bank employee in New York carries a potted plant home after leaving during layoffs in 2019. Photo: AFP — A Deutsche Bank employee in New York carries a potted plant home after leaving during layoffs in 2019. Photo: *AFP*

Citibank - the third largest bank in the US - confirmed last month that it would cut 20,000 jobs over the next two years, equivalent to 10% of its global workforce, to save $2.5 billion in the long term.

January was also the month the US financial industry cut the most jobs since September 2018, with a total of 23,238 people laid off, according to a report by recruitment firm Challenger, Gray & Christmas.

The early 2024 layoff announcements follow a year of massive staff reductions in global finance. According to calculations by the Financial Times , the world’s major banks (not including smaller banks or isolated cuts) are expected to cut more than 60,000 jobs in 2023, marking one of the heaviest years of job cuts since the financial crisis.

In fact, Citibank had already started laying off staff in November 2023, before the recent official announcement. At the same time in the UK, a series of banks including Barclays, Lloyds and Metro Bank simultaneously announced staff reductions.

Some banks have cited increased automation and the use of artificial intelligence (AI) as reasons for reducing headcount. Lloyds, for example, is eliminating certain roles and is only recruiting for data and technology positions.

At the same time, the layoffs are also intended to prepare for a tougher business environment as higher interest rates weigh on the economy, while lower interest rates in the future could also erode profits as lending becomes less profitable.

Deutsche Bank said it increased its bad loan provisions by 300 million euros to 1.5 billion euros ($1.6 billion) by 2023, due to "the continued challenging impact of interest rate and macroeconomic conditions."

Investment banks have been cutting staff costs over the past year and are expected to continue to downsize. "There is no stability, no investment or growth in most banks so there will likely be more job cuts," predicted Lee Thacker, founder of financial services firm Silvermine Partners (UK).

Phien An ( according to CNN, FT, ChallengerGray )

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