Deutsche Bank Brexit plans firm up; 1 in 2 jobs at risk | American Banker

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Deutsche Bank envisions shifting almost half its U.K. positions to the European continent over coming years as the lender’s Brexit plans take shape, people briefed on the matter said.

Most of the 4,000 positions will move to Frankfurt and Berlin under the bank’s base case scenario, the people said, asking not to be identified discussing internal planning. Deutsche Bank will start relocating jobs next year at the earliest once it has dealt with regulatory approvals and other preparations, another person said. No plans have been finalized and numbers could still change depending on the U.K.’s talks with the European Union, the people said.

Deutsche Bank’s scenario underscores how executives are increasingly preparing for a hard Brexit, something Chief Executive Officer John Cryan told employees last month. HSBC Holdings Plc, Europe’s biggest lender, is planning to move about 1,000 roles from the U.K., and JPMorgan Chase & Co. has said 500 to 1,000 jobs may initially be shifted. Deutsche Bank’s planned moves are more dramatic, in part because Brexit-related changes dovetail with a new turnaround plan at the German lender that emphasizes its home market.

An illuminated sign for Deutsche Bank outside a bank branch in Frankfurt, Germany. Bloomberg News

“Brexit probably contributes to this shift and makes it more radical,” said Michael Huenseler, who helps manage about 20 billion euros ($23.7 billion) at Assenagon Asset Management SA in Munich, including Deutsche Bank shares. “The surprise is that this shift isn’t taking place more gradually.”

An official for Deutsche Bank declined to comment.

Chief Regulatory Officer Sylvie Matherat had indicated in April that 4,000 jobs could be at stake in the U.K. post Brexit, though at the time, that number appeared to be a worst case. About 2,000 jobs would be affected if all of the bank’s client-facing staff had to move, and an additional 2,000 could be at risk in associated functions, she said at a conference April 26.

Now the base case, the relocation of 4,000 jobs threatens to leave the bank’s U.K. operations greatly diminished. Deutsche Bank has about 7,000 people in London and approximately 8,500 across the U.K., according to last year’s annual report.

Across the industry, London could lose 10,000 banking jobs and 20,000 roles in financial services as clients move 1.8 trillion euros ($2.3 trillion) of assets out of the U.K. after Brexit, according to think-tank Bruegel. Other estimates have ranged from more than 200,000 jobs to as few as 4,000.

Deutsche Bank is already preparing to move large parts of the trading and investment-banking assets it currently books in London to Frankfurt as part of its response to Brexit, with people familiar with the matter saying last month the lender will probably move about 300 billion euros of balance sheet assets out of the U.K. capital.

Cryan told Bloomberg TV last week that “we genuinely don’t” know what the impact of Brexit will be on the lender’s presence in London. In many cases, Germany’s biggest bank would likely move jobs rather than employees, the people said.

In a sign that it’s not entirely turning its back on London, Deutsche Bank signed an agreement with Land Securities Group to move its U.K. headquarters to a building being constructed at 21 Moorfields in the City of London financial district, according to a filing Tuesday. The lender will lease at least 469,000 square feet (43,570 square meters) for 25 years if planning approval is secured.

Bloomberg News