Deutsche Bank said Thursday it will cut 3,000 jobs and shut a quarter of its branches in Germany as part of its five-year restructuring plan.
More than 80% of the layoffs will be in its private and commercial clients division, which Deutsche Bank said it is revamping to “deliver high-quality service while expanding new forms of digital services.” The bank will start closing down 188 of its smaller branches in Germany before the end of the year, ultimately leaving it with 535 branches.
“This is an important step in the delivery of [the restructuring plan] and in making our bank successful again,” Deutsche Bank CEO John Cryan said in a message to employees.
“This has not been an easy decision for us,” he added. “However, we have to bring down costs while also reorganizing how we work. If we do not, Deutsche Bank will be unable to operate profitably or sustainably in an environment of low interest rates and increasingly strict regulation.”
In October, Germany’s largest bank launched “Strategy 2020” to streamline its business and strengthen its balance sheet after years of meager returns and high legal costs. Deutsche last year posted its first annual loss since 2008.
The announcement of the restructuring of the commercial and private banking business came after the bank struck a deal with labor representatives. The number of branch closures is slightly fewer than expected.
Deutsche, which launched a new mobile banking app this spring, said it will invest around 750 million euros in digital products and advisory services over the next four years, noting that for millenials, “digital services have become the most important factor in choosing a bank” and that only around half of its customers come to a branch even just once a year.
“In future, the bank will perform simple customer services and internal procedures entirely electronically,” it said.
Last month, Moody’s Investors Service downgraded two of Deutsche Bank’s credit ratings, saying the firm is facing “substantial operating headwinds” as it seeks to execute the restructuring plan. In trading Thursday, the bank’s shares rose 5.75% to $17.84.