Deutsche Bank could move up to half of its 4,600 employees from Manhattan to smaller US hubs over the next five years, the lender’s US director told the Financial Times, highlighting the threat to New York’s dominance as a business center in the aftermath of the pandemic.
“He [the pandemic] taught us a ton, ”said Christiana Riley, CEO of Deutsche in the Americas. The fact that many staff members were successfully working from home over the past nine months had neutralized what had previously been “bitter struggles” over whether jobs could be sent to cheaper centers.
Ms Riley, who is also a member of Deutsche’s board of directors, said the New York workforce could “in theory” be cut in half in five years, depending on how “small hubs and pockets” evolve. .
She said she expected banks to concentrate people in multiple hubs, mostly in low-cost areas of the country, rather than adopting the “work from anywhere” model proposed by some. technology companies.
Deutsche’s US workforce already includes around 2,000 people in areas such as human resources, compliance and risk in Jacksonville, Fla., As well as 600 at a technology center in Cary, North Carolina.
Manhattan was losing jobs in financial centers to cheaper cities like Tampa and Dallas even before the pandemic upset business thinking about centralizing people in one place. Commercial vacancy rates in the city fell from 5.7% in the first quarter of the year to 7.6% in the third quarter, according to data from real estate agency Colliers International.
Other financial giants have signaled they may change staff. Goldman Sachs plans to move a number of asset management jobs to Florida as part of a larger cost-cutting plan, a person familiar with the bank’s plans said.
“I am optimistic that New York remains, to some extent, a hub,” Ms. Riley said. “You will continue to have significant amounts of institutional capital in and around New York City, which will make significant the presence of a centralized presence in New York – not to mention the specialized support skills that all of us in the industry have. let’s count, whether it’s legal, whether it’s accounting, whether it’s marketing, name it. . . But that may not be relevant to all of these people ”who are currently working there.
Next year, Deutsche is due to move its staff from Manhattan to a 1 square meter building in Columbus Circle, near Central Park, with workspaces for 4,200 people. However, it can accommodate the current 4,600 employees thanks to flexible working arrangements in which some spend part of the week working from home.
The new building is also less expensive than Deutsche’s existing offices at 60 Wall Street, contributing to the cost savings that Ms. Riley says will help push the return on equity of Deutsche’s U.S. investment bank from 9% this year to 11% by 2022 – as promised at Deutsche investor day last week.
Deutsche has already improved the return on equity of its US investment bank by 2% in 2018 by chop its underperforming equity division, the cutting of around 1,000 jobs and the sale of its prime brokerage arm to BNP Paribas as part of a global campaign to end years of chronic underperformance of the large German bank.
“We didn’t just stabilize the rest [of the US business], we have been able to demonstrate the growth and the fact that there is a viable business and I think we have a lead from here, ”Ms. Riley said, naming financing and sustainable financing instruments as areas potential growth.