Deutsche Bank focused more than 20 junior bankers as well as a handful of senior employees this week as dealmaking dries up ahead of a potential downturn, The Post has learned.
The Tuesday layoffs of workers based in New York were concentrated in the German lender’s advisory group, which advises companies about prospective mergers and acquisitions, and origination, which offers loans particularly for mortgages, sources told The Post.
“This was a proactive effort to rein things in,” an insider told The Post. “This is a repositioning for where the bank is — it’s about aligning with the market.”
Another insider noted the numbers of employees laid off this year wasn’t dramatically more than years past. But given fears of a recession, the belt-tightening this year signals preparation for a slowdown. And for a younger generation of bankers, it is the first time many have faced layoffs.
“There was a real shock factor with this round of layoffs,” the insider added. “There are so many people who have never been through a downturn.”
Earlier this week, The Post reported Goldman Sachs’ junior bankers are fearful of layoffs as CEO David Solomon announced plans to restructure the bank.
Unlike Goldman Sachs, Deutsche culled a handful of underperformers during the pandemic so bankers have faced some targeted layoffs. Advisory and origination have been hit hardest as investment banking revenue falls as much as 50% across the industry.
Talk of layoffs is creeping across Wall Street. Financial executives who have seen downturns before say they recognize the signs of a contracting economy and expect more cost cutting at every company.
“Anyone that isn’t laying people off is in denial,” one Wall Street insider told The Post. “The fear is this is just the beginning. Management is under pressure to cut costs… they’re all lists making right now.”
Although a few higher level employees—including several managing directors—were affected, the bank is far more cautious about laying off senior executives. While junior bankers are far cheaper than senior executives, they’re also much easier to replace.
“It takes 15 years to make a managing director and when the market turns again you need that capacity to ramp up again,” an insider told The Post.
“You can easily replace junior bankers with the next graduating class,” a source added. “Jamie Dimon isn’t going to have kids sitting around drinking lattes all day — banks aren’t welfare for overeducated Ivy leaguers.”
While Deutsche is among the first banks to begin cutting this year, it certainly won’t be the last.
“If we get to the end of February and the economy isn’t as good as we hoped, there will have to be additional actions,” the source added.
Deutsche Bank declined to comment. The bank will report third quarter earnings next week.