Facing business challenges and uncertain forecasts, major banks are cutting costs by reducing staff and utilizing artificial intelligence.
Deutsche Bank has just announced it is cutting 3,500 jobs, representing 4% of its workforce, to accelerate its plan to reduce costs by €2.5 billion ($2.7 billion) by 2025. One of the ways they are choosing to do this is by promoting "simplified and automated workflows." Therefore, most of the cuts are in office support departments.
In 2023, Deutsche Bank's pre-tax profit increased 2% compared to 2022, reaching €5.7 billion ($6.1 billion) – its highest level in 16 years. However, net profit decreased 14%, to €4.9 billion ($5.3 billion).
"We have achieved growth far exceeding our targets, maintaining our focus on cost discipline while investing in key areas," said CEO Christian Stitch.
Deutsche Bank is the latest in a series of banks to announce layoffs in recent months to cut costs and boost profits.
In addition, UBS is also laying off 3,000 employees in Switzerland, where the bank is headquartered. Many other branches of the bank are expected to take similar action.
A Deutsche Bank employee in New York carries a potted plant home as part of a 2019 layoff. Photo: AFP
Citibank, the third-largest bank in the US, confirmed last month that it will 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 also saw the largest number of job cuts in the U.S. financial industry since September 2018, with a total of 23,238 people laid off, according to a report by recruitment firm Challenger, Gray & Christmas.
The wave of layoffs in early 2024 follows a year of massive downsizing in the global financial sector. According to the Financial Times , major banks worldwide (excluding smaller banks or sporadic layoffs) 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 begun laying off staff in November 2023, before its recent official announcement. Around the same time in the UK, a number of banks, including Barclays, Lloyds, and Metro Bank, simultaneously announced staff reductions.
Some banks argue that increased automation and the use of artificial intelligence (AI) are reasons for reducing staff numbers. For example, Lloyds is eliminating certain roles and only hiring for data and technology positions.
At the same time, the reduction in staff is also aimed at preparing for a more challenging business environment as higher interest rates impact the economy . Meanwhile, lower interest rates in the future could also erode profits as lending becomes less profitable.
Deutsche Bank said it increased its provisions for bad debts by 300 million euros, to 1.5 billion euros (or $1.6 billion) in 2023, due to "the continuing challenging impact of interest rate and macroeconomic conditions".
Investment banks have had to cut staffing costs over the past year and are projected to continue downsizing. "Without stability, investment, or growth at most banks, there's the potential for more job cuts," predicts Lee Thacker, founder of the UK-based financial services firm Silvermine Partners.
Phiên An ( according to CNN, FT, ChallengerGray )
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