By theguardian |
Deutsche Bank bosses fitted for £1,200 suits as thousands lose their jobs
Tailors visited executives at London office on day 18,000 staff cuts were announced
On the day Deutsche Bank began making thousands of employees redundant, some managing directors at the company’s office in the City of London were being fitted for suits that cost at least £1,200, it has emerged.
Tailors from Fielding & Nicholson, an upmarket tailor, were pictured walking out of the bank’s office with suit bags on Monday. Ian Fielding-Calcutt, the tailor’s founder, and Alex Riley were there to fit suits for senior managers in spite of plans to cut 18,000 jobs worldwide.
1989-1999 It embarks on a period of global expansion, beginning with the acquisition of merchant bank Morgan Grenfell in the UK and other European markets such as Spain, where it buys Banco de Madrid. It consolidates its US operations into one, in an effort to take on the big beasts of Wall Street such as Goldman Sachs, and in 1999 it builds on its US foothold by snapping up New York-based Bankers Trust for $10bn.
What went wrong at Deutsche Bank?
It embarks on a period of global expansion, beginning with the acquisition of merchant bank Morgan Grenfell in the UK and other European markets such as Spain, where it buys Banco de Madrid. It consolidates its US operations into one, in an effort to take on the big beasts of Wall Street such as Goldman Sachs, and in 1999 it builds on its US foothold by snapping up New York-based Bankers Trust for $10bn.
Deutsche Bank floats on the New York Stock Exchange, cementing its position as one of the major players, not just on Wall Street but in global banking.
Deutsche Bank becomes a leader in mortgage-backed securities, bundling up homeowners’ debt into huge packages and selling them on to investors. The bank continues to sell toxic mortgage-based investments even as the market turns south and it begins betting against such products itself. The bank reports its first annual loss for five decades for the 2008 financial year, losing €3.9bn.
An internal investigation finds that the bank hired private detectives to spy on people it considered a threat – including a shareholder, a journalist and a member of the public. German prosecutors find no evidence of criminal wrongdoing or that senior executives were involved.
It is fined $2.5bn (£1.7bn) by US and UK regulators for rigging the Libor interest rate, ordered to fire seven employees and accused of being obstructive towards regulators. Joint chief executives Anshu Jain and Jürgen Fitschen resign in the wake of the Libor scandal. The bank is fined a further $258m in the US for doing business with US-sanctioned countries like Iran and Syria.
As regulators continue to sift through the wreckage of the banking crash, Deutsche takes a large slice of the blame. In September 2016, its shares slump on news that the institution faces a $14bn (£10.5bn) charge over mis-selling mortgage securities in the US. It eventually reaches a $7.2bn settlement with the US Department of Justice.
UK and US regulators fine Deutsche more than $630m (£506m) after finding that the lender failed to prevent $10bn of Russian money laundering via 'mirror trades', which had no economic purpose and served only to transfer money covertly.
New York financial regulators hand down a fresh fine, just $205m this time, for 'lax oversight' in the bank’s foreign exchange business when it was the world’s largest dealer in foreign currency.
Christian Sewing takes over as chief executive and after three consecutive years of heavy losses, he slashes 7,000 jobs from Deutsche’s bloated investment banking arm.
eutsche enters merger talks with another troubled German lender, Commerzbank. The talks fall apart in April 2019, scuppering plans for a bank that would have been the eurozone’s second largest. Sewing announces 18,000 jobs cuts, 20% of its workforce, with the axe falling worldwide.
Germany’s biggest bank has started the first wave of cuts that some recruiters have predicted could lead to as many as 3,000 job losses in London, where it employs about 7,000 people. Some laid-off staff were reported to be in tears before leaving the building for the last time.
“Our timing was not great,” Fielding-Calcutt told Financial News. “I think a lot of the people getting laid off were traders of some sort, who don’t wear suits, and so we just went ahead as normal with our clients who obviously weren’t affected by the cuts.”
Fielding & Nicholson suits take up to eight weeks to make. Prices start at £1,200 and can go as high as the customer chooses, an employee said.
The image of top managers being fitted for luxury suits while other employees, including contract workers and support staff, were laid off was not what Deutsche wanted. Its chief executive, Christian Sewing, visited London on Monday and repeatedly said how much he regretted the decision to scrap a fifth of his global workforce.
Deutsche’s shares fell 4.2% to €6.50 (£5.85) – the second day of decline since Sewing unveiled his plan. Sewing has said he will spend €7.4bn on his cost-cutting programme while increasing revenue and investing €13bn in new technology.
After increasing their target price for Deutsche’s shares on Monday, Royal Bank of Canada analysts reconsidered and cut their target on Tuesday to €7 from €8. They said Sewing’s ability to execute his plan was less certain than they had thought and Deutsche’s pledge not to raise more capital from shareholders was “walking a fine line”.
Sewing said on Monday he would “put my money where my mouth is” by investing a substantial chunk of his €3.3m base salary in Deutsche shares in the next few years. Reuters reported on Tuesday that he would spend 25% of his salary each year on shares, indicating he intends to invest €825,000 each year.
Deutsche could struggle to hold the remains of its investment bank together after scrapping its equities sales and trading division. Rivals will be circling to pick off disgruntled senior bankers in London, New York and other markets.
Sewing said the bank would pay bonuses to employees who deserved one despite heading for a fourth annual loss in five years. “We are aware that this is a sensitive topic but obviously we will compensate our people according to their operating performance,” he said.
Banking Financial sector European banks London Europe Germany
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