Deutsche Bank is cutting jobs too, just not the banking & trading MDs it hired

Deutsche Bank is doing a Citi. After cutting €200m in costs last year, removing 3,500 jobs from across the bank and getting 75% of the way through its program of "operational efficiencies," it plans to cut another €300m in costs this year. It will do so, in part, by cutting managers. 

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Speaking today, Deutsche Bank CEO Christian Sewing said the "clear intention" is to "operate the bank with lower headcount." The plan in 2025 is, "to actively reduce management layers and roles, and integrate teams as part of our workforce optimization initiatives, in particular scrutinizing those areas where we do not see the required efficiency improvements," Sewing added.

Citi has also reduced management layers and is now moving on to cutting inefficient middle and back office staff. HSBC has cut management layers too, and is now moving on to cutting entire areas of its investment bank. 

Although it's open to cutting underperforming units, Deutsche Bank is not following HSBC, though. While HSBC is cutting revenue generators, Deutsche Bank is still adding them. Sewing said today that Deutsche Bank added "400 targeted revenue generating" roles across the bank last year, even though 51 front office jobs in its investment bank were quietly cut in the final quarter. 

Deutsche Bank's enthusiasm for its bankers and traders comes after a fine 2024. As the charts below show, the bank's M&A and equity capital markets bankers outperformed rivals. They also did so in both the full year and the fourth quarter, when bonuses are contemplated. In fixed income currencies and commodities trading, revenues ended the year 26% up. Deutsche Bank had its best Q4 for fixed income trading ever, even though risk weighted assets in the investment bank are at their lowest level since at least 2022.  

Who does the bank have to thank for this success? In rates trading, which was one of the stars of Q4, Deutsche Bank can thank the likes of Pedro Goldbaum, the former co-head of rates at Citi, who joined DB as head of US rates last February. In credit, it can thank Edward Bayliss, who joined as head of US credit trading in April. Deutsche can also thank all the Credit Suisse credit traders it hired in 2023. And in investment banking there are the 100+ new bankers added by Fabrizio Campelli in the 18 months to June 2024. 

None of these hires will seemingly be trimmed in 2025. More of these hires may be made. Despite his planned cost cuts, Sewing said today that Deutsche plans to invest in its financing business this year, along with the US and "flow credit." It's also spending heavily on technology and controls.  

Whether Deutsche Bank's star hires will get paid is another question, though. Some may be lukcy. Goldbaum was hired from the street, but Bayliss and others may well be on guarantees. Those who aren't could find themselves disappointed when Deutsche Bank announces bonuses in March: profits at Deutsche's investment bank were up 78% last year, but compensation spending was up 6% and rose only 1% in the final quarter when bonus pools are topped-up; or not.

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