BERLIN, July 8 (Xinhua) -- Following the announcement of a major restructuring plan for Deutsche Bank, Germany's largest commercial bank, investors and the trade union ver.di responded mainly positively on Monday.
"The significant downsizing of investment banking is a radical realignment of Deutsche Bank," which would stabilize German jobs in the long term, said ver.di Chairman Frank Bsirske.
Deutsche Bank announced on Sunday to significantly downsize its investment banking division and to bundle its corporate customers and transaction bank into a new division called Corporate Bank, both of which would be led by the bank's chief executive officer (CEO) Christian Sewing.
As part of the restructuring, Deutsche Bank will be cutting the number of full-time positions by 18,000 to 74,000 by 2022.
The restructuring plan was "Deutsche Bank's most comprehensive transformation in decades," said Sewing after the supervisory board approved the "hard cuts" on Sunday.
The ver.di was assuming that the planned staff reductions would mostly take place in the Bank's investment banking division which is mainly based in London and New York.
"At the moment we cannot quantify the extent to which this will also affect the infrastructure sectors in Germany," said Bsirske.
Employees of Deutsche Bank's private and corporate customer bank would still be protected against dismissal until mid-2021, according to an agreement reached between the trade unions ver.di, the association of German bank employees (DBV) and Deutsche Bank in 2017.
"CEO Sewing has promised that he will stay on course in his cooperation with ver.di" and the trade union was "therefore expecting the trusting, constructive and reliable cooperation to continue," added Bsirske.
In a media call on Monday, Deutsche Bank's chief financial officer James von Moltke said the bank is striving to "break even or better" in 2020, but admitted there was significant uncertainty in the forecast. Due to the restructuring, Deutsche Bank is expecting to make a loss of 2.8 billion euros (3.14 billion U.S. dollars) this quarter.
At the start of trading on Monday, Deutsche Bank's plans for the radical restructuring and job cuts were well received by the stock market but the share price later turned down to around 7.10 euros.
Shares of Deutsche Bank never returned to their pre-crisis levels of around 90 euros in 2007. Since then, the Bank suffered from various scandals relating to money laundering, interest rate scams and heavy penalties for violating economic sanctions.
Responding to the restructuring plans, Alexandra Annecke, fund manager at the German fund company Union Investment, stressed that an adjustment of Deutsche Bank's strategy was overdue in view of the changed framework conditions.
"Regulation, interest rate environment and competitive pressure but also the long adherence to the old strategy require radical steps. The announced measures are a radical cure," said Annecke.
Deutsche Bank's plans to do without a capital increase in its restructuring were generally positive, according to Annecke.
The management board and supervisory board at Deutsche Bank are planning for the bank to shoulder the costs for restructuring, severance payments and depreciation without a capital increase. However, the bank's shareholders should again forgo a dividend for the years 2019 and 2020.
Annecke cautioned that forgoing a capital increase would burden the bank's earning power for years to come and "shareholders will need to maintain their patience."
The rating agency Moody's viewed the Bank's restructuring as a "positive step towards a more balanced and sustainable business model."
To reflect on the "significant challenges" facing Deutsche Bank, however, the agency maintained a negative outlook for it and is threatening to downgrade the current A3 rating.
