Deutsche Bank is in the midst of a radical restructuring that involves a partial retreat from investment banking activities, a shrinking of its balance sheet and 18,000 job cuts by 2022 © AP

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Deutsche Bank is planning to cut one in five bank branches in Germany as the Covid-19 emergency drives more customers online and as the country’s largest lender strives to return to profitability.

The bank announced on Tuesday it would close about 100 branches across the country, reducing the total number of domestic branches to about 400.

“With regard to offering advice [to our clients], the branch is neither the sole nor the key location any more [these days],” Philipp Gossow, head of Deutsche’s German retail business, wrote in an email to staff seen by the Financial Times. “Hence we will further optimise our branch network.”

The decision follows a move by domestic rival Commerzbank, which over the summer announced it would not reopen 200 branches that were shut during the pandemic.

Since 2019 Deutsche has been in the midst of a restructuring that involves a partial retreat from investment banking activities, a radical shrinking of its balance sheet and 18,000 job cuts by 2022. In the early phase of the virus crisis, Deutsche temporarily halted lay-offs.

Chief financial officer James von Moltke said on Tuesday that there were “encouraging signs” in the lender’s retail unit as well as its transaction bank in the third quarter. Speaking at Bank of America’s financials conference, Mr von Moltke said the investment bank in the current quarter performed “at least in line with, or ahead of, what our peers have guided so far”.

The new round of branch closures will entail an unspecified number of job cuts. Deutsche is seeking to finish the negotiations with the workers’ council by the end of this year so the cuts can be made in 2021, according to a person familiar with the plans.

“Basically, we think it is right that Deutsche Bank is reviewing and refining its branch network,” said Jan Duscheck, head of the banking group at Verdi, Germany’s service sector union, but added that “this must not turn into a mere cost-cutting exercise”. Mr Duscheck sits on the bank’s supervisory board.

He added that Deutsche had committed to refrain from involuntary redundancies.

Deutsche’s retail unit, which has more than 22m clients globally and accounts for more than a third of the lender’s revenue, generated €269m in pre-tax losses in 2019.

Chief executive Christian Sewing has vowed to lift the division’s return on tangible equity to up to 11 per cent by 2022, compared with minus 2.5 per cent last year.

In its home market of Germany, Deutsche’s retail division is suffering from tough competition with the country’s municipality-owned Sparkassen, the regional savings banks. It is also feeling the effects of negative interest rates, falling revenues and high costs.

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The new round of branch closures, first reported by Reuters, follows a similar initiative launched in 2016 when Deutsche slashed its number of branches from more than 700 to about 500.

Mr Gossow said the latest retreat would focus on cities where Deutsche operated multiple branches. He argued that the behaviour of retail clients had changed since the start of the pandemic and they were increasingly turning to digital services and shunning cash. In the first half of this year, Deutsche temporarily closed 200 of its 500 branches and streamlined its internal processes within the retail unit.

Mr Gossow said these changes were working well and “offer a big opportunity to permanently become simpler and more efficient”.



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