Deutsche Bank's peculiar headcount changes in its investment bank reflect the new reality for jobs
Give or take a few hiccups, the three months from March were a good quarter for investment banks everywhere. Records were broken, particularly in equities sales and trading and equity capital markets. Profits boomed. Some of those responsible are even likely to receive higher bonuses for their efforts.
All things being equal, this should be a good time to look for a job. But as we have observed before, it is not. These are great times for revenues and for profits. They are not great times for jobs.
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Deutsche Bank's Q2 results, released today, underscore this. While revenues in the investment bank rose 19% year-on-year in Q2 and profits were up 59%, overall headcount in the business was up only 1%.
Unlike other banks, Deutsche also helpfully splits out headcount assigned to front office functions, to 'business aligned operations' and to 'central infrastructure'. The variations between these areas are also informative.
In the three months to June, Deutsche held headcount in the front office of its investment bank exactly steady at 5,061 people. This was despite "targeted investments" and "IBCM hiring", which presumably refer to its stated intention of hiring across industrials, the financial institutions group, healthcare and tech in its investment banking and capital markets business, and of building out US flow credit trading and US securitized products. People have certainly been hired; so people have presumably also left or been cut to hold headcount steady.
At the same time, Deutsche made some big cuts to its 'business aligned operations' for the investment bank, from which 433 people disappeared in the second quarter, bringing their numbers to a new low of 2,613. But it added 48 people to the far more populous category of central infrastructure, in which 12,559 people are allocated to the investment bank.
Deutsche Bank's investment bank headcount evolution is almost certainly the result of its pursuit of "operating efficiencies," which it says have led to €300m of cost savings across the bank this year as it builds a "scalable operating model".
More operating efficiencies are coming. Deutsche CFO Raja Akram declared today that the bank is "seeing increasing signs of potential incremental productivity benefits led by AI and organization simplification versus our earlier assumptions for 2028." The second half could be interesting for people in business aligned operations.
A similar dynamic is in evidence elsewhere. Barclays, for example, made £350m of efficiency savings across the bank in the second quarter and yesterday declared its intention of running the bank on "standardized foundations," while using "modernized approaches and...harmonized systems and processes."
These standardized, harmonized, modernized systems will be "powered by our talented and inventive colleagues," declared Barclays. That's nice - if you happen to fall into that category.
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