Some staff in London reported to be in tears after hearing their jobs have gone

Deutsche Bank started slashing thousands of jobs in the City of London and in New York only hours after announcing a drastic plan to reduce its global workforce by 18,000.

Germany’s biggest lender employs almost 8,000 people in the UK, with 7,000 in London, which is one of the main hubs for its global investment bank, where the bulk of the job losses will be focused. The jobs being cut make up about a fifth of Deutsche’s global workforce of 91,500.

Some staff in London were reported to be in tears after hearing that their jobs had gone. Workers started leaving the bank’s building in the City at around 10am carrying bags of belongings. Some said they were told their passes would stop working at 11am.

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A male contract worker on his way into the building in Great Winchester Street said: “The bank is not doing well, so they have to do something to get back up and running.”

Deutsche has failed to recover from the financial crisis of 2008 and, faced with rising costs and a falling share price, Deutsche’s chief executive, Christian Sewing, is shutting the division that sells and trades shares and cutting back on the bank’s other businesses. The shares, which peaked at €110 in 2007, have crashed to less than €7, and lost another 5% when details of the job cuts were revealed.

The cull started in the Asia Pacific region, soon after the cuts were confirmed on Sunday evening in Europe, with employees being let go in Sydney and Hong Kong. A Hong Kong equities trader told Reuters the mood was gloomy as people were called individually to meetings. “[There are a] couple of rounds of chats with HR, and then they give you this packet and you are out of the building,” the trader said.

In New York, hundreds of workers were summoned to the cafeteria at Deutsche’s Wall Street office to hear their fates. Employees were seen leaving with their redundancy terms in large white envelopes. Staff at the nearby Full Shilling Irish bar were expecting laid-off Deutsche workers to congregate in the afternoon.

After suffering big losses in the wake of the financial crisis and also in four of the past five years, Deutsche Bank’s problems have raised fears about its future among German government ministers. Berlin encouraged it to discuss a merger with its German rival Commerzbank, but talks ended in April, leaving Sewing to look for other means to safeguard the 149-year-old bank’s future.

Sewing, who travelled to London to announce the cuts outlined on Sunday, expects to spend €7.4bn in order to cut the bank’s annual running costs by €6bn a year by 2022.

Deutsche is also separating €74bn of bad loans and risky derivative contracts into a so-called bad bank, to be run down or sold to banks under less pressure. Sewing also pledged to invest an extra €13bn in technology and increase revenue in the core bank.

Quick guide Deutsche Bank job cuts – what staff and analysts had to say Show Hide Christian Sewing, Deutsche Bank's chief executive, told staff that the cutbacks were regrettable but inevitable: “We are making deep cuts. I personally greatly regret the impact this will have on some of you. In the long-term interests of our bank, however, we have no choice.” An equities trader in New York predicted that the layoffs on the equities floor would be swift: “It’s obviously going to suck for a couple of years.” One IT worker leaving their City of London office said the bad news was dished out briskly on Monday morning: “I was terminated this morning. There was a very quick meeting and that was it.” An equities trader emerged from Deutsche Bank’s London offices and headed to the pub, saying: “I got laid off; where else would I go?” Another equities trader in Hong Kong said their offices had been gripped by news of the layoffs: “There is hardly any work getting done today and folks are just mailing or calling friends or headhunters. Half of the floor is gone and others are just waiting to be called in. Some people are saying their byes even before being called in.” A banker leaving the Hong Kong office confirmed that Deutsche had begun implementing the cuts on Monday: “If you have a job for me, please let me know.” A Singapore banker who remains in his job questioned whether Sewing’s plan would revive Deutsche’s fortunes: “The biggest question for us is where do we go from here if we don’t offer the whole suite of products? Will clients stick with us or is the game over?” Banking expert Philip Augar says Deutsche had bowed to the inevitable: “Their ambition was to challenge the Wall Street giants. And for about decade, it looked as though they’d pulled it off … They’ve been limping along for the last few years and I suppose this day had to come.” Anke Reingen of Royal Bank of Canada said the restructuring was more radical than expected: “However, as the plan pushes the profitability improvement further out in time on our estimates, we see more value elsewhere in the sector. Maintaining our rating of underperform, speculative risk.” Graeme Wearden

He promised not to ask shareholders for fresh funds. They have already stumped up almost €30bn in the past decade, only to see the company’s market value plunge to half that amount.

Analysts at the US bank JP Morgan said Deutsche’s plan was “for the first time not half-baked”. But they also pointed out the bank’s poor record on executing plans, and questioned how motivated investment bank employees would be to revive the remaining business. Deutsche indicated that it could post another loss this year. It has already been through a series of attempted revamps, but without the big overhauls put in place by rivals such as Royal Bank of Scotland.

The bank has given no breakdown for the job cuts, but they are likely to fall most heavily in Europe and the US, where its investment bank, which has 38,000 workers, employs thousands of people. Job losses will affect frontline traders and support staff in areas such as IT and compliance.

The cuts will undo decades of expansion as Deutsche tried to compete with the biggest Wall Street firms such as Goldman Sachs. It made bold moves in the late 80s and 90s, buying Morgan Grenfell in London and Bankers Trust in the US.

Deutsche earned the grudging respect of Wall Street rivals during the boom years leading up to the financial crisis, but the bank, which was a big player in the mortgage bonds at the centre of the US subprime crisis, struggled in the aftermath. It failed to absorb extra costs imposed by regulators after the crisis, turning its once powerful investment bank into a burden.

Deutsche has also been at the centre of a string of scandals caused by lax controls during the boom years and has come under scrutiny over its business dealings with Donald Trump. Bankers Trust was the only New York bank prepared to lend to Trump in the 90s. Congress and New York state are investigating Trump, his family and Deutsche.

The bank paid billions of dollars in fines and settlements related to failings before and after the 2008 financial crisis. It agreed a $7.2bn settlement with the US Department of Justice in 2017 in connection with selling bonds backed by mortgages lent to people with bad credit histories. More than $4bn of that sum was earmarked for homeowners who had lost out as a result of Deutsche’s dealings.

The job cuts will be some of the biggest since the bankruptcy of Lehman Brothers in 2008 put 26,000 people out of work. Deutsche’s woes also show that the financial crisis is continuing to reverberate more than a decade after its peak.

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Sewing, who joined Deutsche as an apprentice 30 years ago aged 19 and is the bank’s fifth chief executive since 2008, said he regretted the cuts, but drastic action was needed after his predecessors’ careless expansion. He said the investment bank would now rely less on sales and trading of shares and bonds to make it viable.

“We tried to compete in nearly every area of the banking market at the same time,” Sewing said. “Too many resources went to businesses where we don’t compete to win … Parts of our investment bank have been a drag on our results for years.”

Deutsche said a slimmed-down corporate bank would keep a significant business in London, where it is currently constructing a new City headquarters. Sewing said Deutsche could continue to advise on flotations and other share issues for corporate clients without an equities trading division.