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Germany’s Deutsche Bank To Cut 18,000 Jobs In Major Overhaul

08 Jul 19
Blanco
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By Thomson Reuters

Source https://www.ndtv.com/business/deutsche-bank-job-cut-latest-germanys-deutsche-bank-to-cut-18-000-jobs-in-overhaul-2065825

 

FRANKFURT: 

Deutsche Bank plans to cut 18,000 jobs in a sweeping, 7.4-billion-euro overhaul designed to turn around Germany’s struggling flagship lender.

The plan represents a major retreat from trading by Deutsche Bank, which for years had tried to compete as a major force on Wall Street.

The bank will scrap its global equities business and scale back its investment bank. It expects a 2.8 billion euro ($3.1 billion) net loss in the second quarter as a result of restructuring charges.

Beyond the expected cutbacks to equities, Deutsche said it would also axe some of its fixed income operations, an area traditionally regarded as one of the bank’s strengths.

It will create a new unit to wind-down unwanted assets, with a value of 74 billion euros of risk-weighted assets.

Chief executive officer Christian Sewing flagged an extensive restructuring in May when he promised shareholders “tough cutbacks” to the investment bank. The pledge came after Deutsche failed to agree a merger with rival Commerzbank.

The overhaul, one of several over the past few years, signals that Deutsche is coming to terms with its failure to keep pace with Wall Street’s big hitters such as JP Morgan Chase & Co and Goldman Sachs.

Last week, the head of Deutsche’s investment bank Garth Ritchie agreed to step down, marking a sign of the division’s waning influence.

Sewing called the package the “most fundamental transformation” of the bank in decades. “This is a restart,” he said.

Media reports had suggested that Deutsche Bank could cut as many as 20,000 jobs — more than one in five of its 91,500 employees.

In the event, the bank said it would reduce headcount to 74,000 employees by 2022.

The bank did not disclose a geographic breakdown of the job cuts. The equities business is focused largely in New York and London.

A person with direct knowledge of the matter said job cuts would be distributed around the world, including in Germany.

The bank’s supervisory board met on Sunday to agree the proposed changes, one of the biggest announcements of job cuts at a major investment bank since 2011 when HSBC said it would axe 30,000 jobs.

Stephan Szukalski, head of the DBV union, told news agency Reuters that the measures were in the right direction.

“This could be a real new beginning for Deutsche Bank,” said Szukalski, who also sits on the bank’s supervisory board.

European markets mixed after strong US job growth; Deutsche Bank rally fades; Enagas shares dip 6%

08 Jul 19
Blanco
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By Sam Meredith

Source https://www.cnbc.com/2019/07/08/europe-markets-strong-us-job-growth-and-deutsche-bank-in-focus.html

 

European stocks were flat Monday morning, after stronger-than-anticipated jobs data on Wall Street tempered expectations for a Federal Reserve rate cut.

The pan-European Stoxx 600 was little changed from the previous session shortly after the opening bell, with sectors and major bourses pointing in opposite directions.

 

Europe’s basic resources stocks led the gains during mid-morning deals, up almost 1%. ArcelorMittal, Tenaris and Rio Tinto were among the sector’s best performers, all trading more than 1.5% higher.

Looking at individual stocks, Deutsche Bank surged towards the top of the European benchmark shortly after the opening bell, before paring most of its gains during mid-morning trade.

Germany’s flagship lender announced Sunday that it would pull out of its global equities sales and trading operations, scale back its investment banking and slash thousands of jobs as part of a sweeping restructuring plan to improve profitability. Shares of Deutsche Bank were down around 0.5% at around 10:00 a.m. London time.

Meanwhile, Spain’s Enagas tumbled to the bottom of the index after a flurry of target price downgrades from RBC, J.P. Morgan and Kepler Cheuvreux. Shares of the utilities firm slipped nearly 7% on the news.

Geopolitics

Global equities have generally been boosted by rising expectations that central banks will keep interest rates at or near record lows to boost economic growth.

Those expectations were tempered by a closely-watched U.S. labor report on Friday. Nonfarm payrolls jumped 224,000 in June, beating forecasts for 160,000, running contrary to worries that both the employment and overall growth picture was beginning to weaken.

In currency markets, the Turkish lira weakened to its lowest level since late June after the country’s central bank governor, Murat Cetinkaya — whose four-year term was due to run until 2020 — was replaced by Murat Uysal.

Turkish President Tayyip Erdogan sacked Cetinkaya for refusing the government’s repeated demands to cut interest rates, raising questions over the central bank’s independence.

The lira pared some of its losses to trade at around 5.7520 Monday morning.

9 challenges Amazon faces on its 25th birthday

08 Jul 19
Blanco
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By Jordan Valinsky

Source https://edition.cnn.com/2019/07/04/business/amazon-25th-birthday-challenges-trnd/index.html

New York (CNN Business)As Amazon marks its 25th year, the groundbreaking company is dealing with a host of controversy and problems. High-powered officials are challenging its size and calling for it to be broken up. Politicians are raising questions about its worker pay. And Amazon faces growing competition from rivals. The Seattle-based company, whose dominance now reaches around the world, could be facing a quarter-life crisis.

Elizabeth Warren calls for a breakup

Senator Elizabeth Warren doesn’t like what she sees in Big Tech. The Democratic presidential candidate released a plan to break up giant companies like Amazon(AMZN). She wants to impose new rules on certain kinds of tech companies that have $25 billion or more in annual revenue, and unwind some high-profile mergers such as Amazon’s $13.7 billion purchase of Whole Foods.
“Today’s big tech companies have too much power — too much power over our economy, our society, and our democracy. They’ve bulldozed competition, used our private information for profit, and tilted the playing field against everyone else. And in the process, they have hurt small businesses and stifled innovation,” Warren wrote in a Medium blog post published in March.

AOC slams Jeff Bezos’ pay

Rep. Alexandria Ocasio-Cortez has slammed Amazon CEO Bezos for being a billionaire while his company pays its warehouse workers what she called “starvation wages.”
She recently said in an interview with ABC News that the company’s low worker pay has helped make Bezos the world’s richest person.
In a response to the New York Democrat, Amazon said she is “just wrong.” The company says it pays a $15 minimum wage and offers full benefits to employees in their first days on the job. It also noted that it has lobbied to raise the federal minimum wage.
Senator Bernie Sanders has also made similar arguments against Amazon’sworker pay.

Biden questions Amazon’s taxes

Joe Biden knocked Amazon over the amount of corporate taxes it pays.
“I have nothing against Amazon, but no company pulling in billions of dollars of profits should pay a lower tax rate than firefighters and teachers. We need to reward work, not just wealth,” he said on Twitter. The tweet from the former vice president and Democratic presidential hopeful referenced a corporate tax rebate that Amazon received in 2018.
Amazon responded, saying in a tweet that the company pays “every penny we owe.” It added: “Congress designed tax laws to encourage companies to reinvest in the American economy. We have $200B in investments since 2011 & 300K US jobs. Assume VP Biden’s complaint is w/ the tax code, not Amazon.”

Trump investigates post office deal

Amazon isn’t getting much reprieve from the Trump administration, thanks to the president’s beef with Amazon founder and CEO Jeff Bezos as well as the United States Postal Service.
Last year, Trump ordered a federal task force to investigate the Postal Service’s finances because he thinks Amazon takes advantage of the agency. At the root of all this drama is likely Bezos’ ownership of The Washington Post, which has published stories that are unfavorable of to Trump throughout his presidency.
Amazon has a confidential agreement with the Postal Service under which the agency delivers a large number of packages directly to the post office closest to their destination. The Postal Service then delivers the packages to customers.