Deutsche Bank puts freeze on hiring: source
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A statue is pictured next to the logo of Germany's Deutsche Bank in Frankfurt, Germany September 30, 2016. REUTERS/Kai Pfaffenbach/File Photo
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By Kathrin Jones
FRANKFURT (Reuters) - Deutsche Bank
The German lender sent managers a memorandum about the freeze on Wednesday, the source said, adding that this would not apply to the compliance department which ensures staff abide by the law.
The hold on hiring is the latest in a series of responses by management to a crisis of confidence that has come to a head with the prospect of a multi-billion-dollar legal penalty.
Deutsche Bank is currently rethinking elements of its revamp with more decisions likely this quarter, mainly affecting unprofitable business lines, people close to the bank have said.
Last week, Christine Lagarde, the head of the International Monetary Fund, took the unusual step of questioning the bank's business model, urging it to "decide what size it wants to have" after turbulent weeks in which its share price plunged.
An organisational change, launched in October last year by the then new chief executive John Cryan, aimed to slash costs by cutting 9,000 staff, overheads and selling off some non-core businesses.
But a year on, staff numbers have barely changed. Headcount, which stood at more than 101,300 in the middle of this year, is, in fact, higher than the roughly 98,600 one year earlier.
The need to adjust the flagging plan has now been given urgency by a U.S. demand to pay up to $14 billion for the mis-selling of toxic mortgage securities before the financial crisis.
Worries that a fine of that size would be difficult for Deutsche to absorb have sent its shares to a historic low, prompting speculation that the government could be forced to help a bank, whose returns have already slumped to zero.
Deutsche Bank pays more to borrow from other banks than its peers including stragglers in Greece and Italy, Euribor data showed on Tuesday, a trend that underscores the gravity of the problems facing Germany's flagship lender.
With interest rates ultra low, Deutsche is the only bank to pay to borrow over a 9- or 12-month period of a group of 20 lenders polled to determine the price of interbank borrowing for the wider sector.
(Reporting by Kathrin Jones; writing by Edward Taylor and John O'Donnell; Editing by Ruth Pitchford)
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