Deutsche bank is planning to cut one in five bank branches in its home network as the covid-19 emergency has triggered a leap of digitalisation among retail customers and germanys largest lender steps up attempts to return to profitability.
Deutsche announced on tuesday that it would close about 100 branches across the country, reducing the total number of domestic branches to around 400.
With regard to offering advice [to our clients], the branch is neither the sole nor the key location any more [these days], philipp gossow, the head of deutsches german retail business, wrote in an email to staff seen by the financial times. hence we will further optimise our branch network.
The decision follows a move by domestic rival commerzbank, which over the summer announced that it would not reopen 200 branches that were shut during the pandemic.
Since 2019 deutsche has been in the midst of a restructuring that involves a partial retreat from investment banking activities, a radical shrinking of its balance sheet and 18,000 job cuts by 2022. in the early phase of the virus crisis, deutsche temporarily halted lay-offs.
The new round of branch closures will entail an unspecified number of job cuts that will contribute to the lenders overall job reduction target, the bank said. deutsche is seeking to finish the negotiations with the workers council by the end of this year so the cuts can be executed in 2021, according to a person familiar with the plans.
Verdi, germanys service sector union, was not immediately available for comment.
Deutsches retail unit, which has more than 22m clients globally and accounts for more than a third of the lenders revenue, generated 269m in pre-tax losses in 2019.
Chief executive christian sewing has vowed to lift the divisions return on tangible equity to up to 11 per cent by 2022, compared with minus 2.5 per cent last year.
In its home market of germany, deutsches retail division is suffering from tough competition with the countrys municipality-owned sparkassen, the regional savings banks. it is also feeling the effects of negative interest rates, falling revenues and high costs.
The new round of branch closures, which was first reported by reuters, follows a similar initiative launched in 2016, when deutsche bank slashed its number of branches from more than 700 to about 500.
Mr gossow said that the latest retreat from physical branches would focus on cities where deutsche operated multiple posts. he argued that the behaviour of retail clients had changed since the start of the pandemic and they were increasingly turning to digital services and shunning cash. in the first half of this year, deutsche temporarily closed 200 of its 500 branches and streamlined its internal processes within the retail unit.
Mr gossow said these changes were working well and offer a big opportunity to permanently become simpler and more efficient.