Deutsche Bank Seeks to Speed Up Branch Closures to Save Costs
Deutsche Bank Seeks to Speed Up Branch Closures to Save Costs
(Bloomberg) --
Deutsche Bank AG is seeking to accelerate cuts to its German retail branch network as part of Chief Executive Officer Christian Sewing’s effort to drive down costs.
The extent of the cuts partly depends on the results of a pilot project in which it serves clients from its two domestic retail brands, Deutsche Bank and Postbank, in the same branch, according to people familiar with the matter. Some executives are skeptical the test will be successful, the people said, asking not to be identified discussing the private information.
The German retail unit is under pressure to cut costs after its head Manfred Knof committed to delivering 1 billion euros ($1.1 billion) out of 2.5 billion euros in savings Sewing pledged to wring from the bank’s core divisions by the end of 2022. Closing or slimming down branches is expected to save about 200 million euros, Knof has said.
“We continue to adjust our branch network as we always have,” a spokeswoman said by email. “We don’t plan a program for branch closures beyond that.”
Deutsche Bank already slashed about 400 German branches over the past four years. It now has approximately 1,300 left, of which some 500 are Deutsche Bank branches and the rest Postbank.
Deutsche Bank acquired Postbank -- the former financing unit of Germany’s postal service -- in 2010 but only recently started to integrate it. As a result, Knof is currently focused on eliminating personnel and IT duplications. The lender in May dissolved the legal entity that ringfenced Postbank’s assets from the rest of Deutsche Bank, giving Knof another lever to push through cuts.
Other initiatives pursued by the retail head involve renegotiating third-party contracts. He recently invited bids for a long-term insurance distribution agreement with Zurich Insurance Group AG, people familiar with the matter have said.
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