The problems at Germany’s largest lender, Deutsche Bank, which has seen its share price tumble to record lows on concerns of a looming US$14 billion (S$19 billion) fine by US authorities, could raise questions over the fate of some of its 2,100-strong workforce in Singapore, analysts said on Monday (Oct 3).
“For the German bank, the impact of negative interest rates and slower growth have affected profitability. As for the impact here in Singapore… we might find a possibility of the bank reducing headcount,” said CIMB Private Banking economist Song Seng Wun.
“The knock-on impact on Singapore would be pressure on the labour market in the finance sector. The tough labour market within finance may get tougher,” he added.
Singapore has been Deutsche Bank’s Asia-Pacific head office since 1988, after the lender first established a presence in the city-state in 1971, its corporate website showed. It has a wholesale banking licence here and its business lines including corporate & investment banking, global markets, asset management, and wealth management.
When asked about possible job cuts at the Singapore office, a spokesperson for Deutsche bank said: “Singapore is and will continue to be a key hub for Deutsche Bank in Asia-Pacific, a region which delivered 14 per cent year-on-year revenue growth last year and remains a core part of our global network.”
Deutsche Bank shares plummeted to a record low of 9.90 euros last week and were trading at 11.45 euros mid-afternoon in Frankfurt on Monday. The bank has been battling rumours that the German government may have to come up with a rescue plan in case it cannot pay the staggering fine imposed by US regulators for mis-selling mortgage-backed securities before the global financial crisis. The fine is more than twice the provision it had set aside for litigation.
Deutsche Bank last October unveiled a sweeping plan to restore its finances, including eliminating 9,000 jobs or about 9 per cent of the global workforce, including 4,000 positions in Germany. However, unlike Australia and New Zealand Banking Group, a qualifying full bank which has slashed about 400 jobs in Singapore over the past year, any headcount reduction at Deutsche Bank here won’t likely to be as drastic, analysts said.
“Deutsche Bank’s business in Singapore has… little retail exposure; it does more private and investment banking. The bank is still geographically strong in Singapore. It is a significant player here and would be more distant from the issues faced at the German headquarters,” said KGI Securities (Singapore) trading strategist Nicholas Teo.
UOB economist Francis Tan said: “There will be some impact, maybe small cuts but not likely to be big for the bank. Asia is still rising, so even if there are cuts it would be more on the European side. Looking at the relative growth rates this area has compared to the Western world, it would not be a good move to cut a lot of jobs. You don’t want to kill the golden goose.”
Global banks have been slashing headcount in the Republic against the backdrop of weak economic outlook and stricter capital rules. Besides ANZ, banks such as Barclays and Standard Chartered have let go some of their employees in Singapore over the past year.
The crisis faced by Deutsche Bank is unlikely to be a ‘Lehman moment’, experts said, referring to the collapse of the storied US investment bank Lehman Brothers eight years ago that played a major role in the global financial crisis.
“A lot of people who are looking at a bank like Deutsche, and easily they are comparing this to Lehman but it is not the same. If you look at the liquidity conditions of banks now, it is very different from 2008-09,” said Mr Tan.
“Balance sheets are not as weak as eight years ago and banks are not as vulnerable as they were,” Mr Song said.
