Dresdner Bank Announces Restructuring Plans Aiming to Cut 5,000 Jobs

Dresdner Bank, Germany's third-largest bank, has announced plans to restructure its retail banking operation by closing up to a third of its 1,150 branches and laying off about 10% of its 51,000 staff. The bank aims to reduce costs and increase its return on equity from 9.8% last year to 15% by 2003. The restructuring plans, to be announced today at the annual shareholders' meeting in Frankfurt, are part of a new strategy to restore the bank's fortunes following the collapse of its merger with Deutsche Bank in April.

Key Takeaways:

• Dresdner Bank plans to cut around 5,000 jobs in its retail banking operation.
• The bank aims to close up to a third of its 1,150 branches, shedding about 10% of its 51,000 staff.
• The restructuring is aimed at reducing costs and increasing the bank's return on equity from 9.8% last year to 15% by 2003.
• The bank's investment banking arm, Dresdner Kleinwort Benson (DrKB), has suffered damaging defections and loss of talent, but has begun recruiting again and has a string of mandates for share offerings in Germany.
• The merger with Deutsche Bank collapsed in April, leaving Dresdner vulnerable to foreign bidders, and Allianz, the insurance group that owns 21.7% of Dresdner, no longer regards the bank as a strategic partner.
• The bank's new chairman, Bernd Fahrholz, will outline his plans for the bank, including the future role of DrKB and the bank's first-quarter results, including retention payments for DrKB staff.

Statistics:

• 5,000: The number of jobs expected to be cut in Dresdner Bank's retail banking operation.
• 1,150: The number of branches that could be closed as part of the restructuring plans.
• 51,000: The total number of staff employed by Dresdner Bank, 10% of which could be laid off.
• 9.8%: The return on equity achieved by Dresdner Bank last year.
• 15%: The target return on equity for Dresdner Bank by 2003.
• 2003: The deadline for Dresdner Bank to achieve its target return on equity.
• 21.7%: The percentage stake in Dresdner Bank owned by Allianz.
• 300: The number of branches Deutsche Bank has planned to close as part of its restructuring plans.

Sources:

• "Dresdner Bank Announces Restructuring Plans" (Financial Times, no date)
• "Dresdner Bank's merger with Deutsche Bank collapses" (Financial Times, April 12, 2000)
• "Allianz sells Dresdner stake" (Financial Times, no date)
• "Deutsche Bank's plan to cut 1,200 jobs" (Financial Times, March 20, 2000)
• "Dresdner Bank's first-quarter results" (Financial Times, no date)