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Deutsche Bank merger talks heighten uncertainty for U.S. staff

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The future of banking presence in the United States in the field of trade and investment has already been questioned, as some shareholders are calling for additional cuts in addition to those announced last year, and speculation intensified after the confirmation of the merger talks on Sunday.

It is expected that the German government, which owns a 15 percent stake in Commerzbank, will retain a stake in the merged business if the transaction is completed. Some employees fear that this may cause the bank to focus on its domestic market.

Both banks warn that the outcome of the negotiations remains uncertain, and the process may drag on for months. At the same time, key employees could compete with Wall Street banks and hedge funds, which would further weaken a business that has been ineffective for many years. In recent months, several bank executives have ceased operations in the United States.

"We do not know what is happening. Everything is in the air, ”said one senior employee of the bank’s US equity department who asked not to be named because of the sensitivity of the issue.

Chief executive Christian Shiving on Sunday reminded employees that Deutsche intends to remain "a global bank with a strong business in capital markets,” and a source familiar with this issue said that the merger will not change the bank’s commitment to a strong US presence. ,

Deutsche Bank declined to comment on Wednesday.

German Finance Minister Olaf Scholz, who is reportedly a supporter of the merger, previously stressed the need for the German banking sector to support German companies that want to go abroad for export.

After the financial crisis of 2007-2009. Deutsche maintained a broad presence on Wall Street, despite the fact that European competitors, such as Credit Suisse Group AG, significantly reduced the amount of investment banking operations in the United States.

Deutsche Bank's US business brought about half of its income to its total investment banking unit, which includes corporate and investment banking, as well as trade, even though it had a relatively high cost of capital.

However, due to judicial and regulatory investigations of past misconduct, businesses fought against Wall Street rivals.

Last May, Deutsche said it would reduce the number of staff around the world to below 90,000 from 97,000. This included a 25 percent reduction in sales of stocks and jobs, much of which was in New York, where it was lagging behind competitors.

According to banking analysts, job cuts in the United States will not cause the same political breakthrough that both banks will face if they fire jobs in Germany.
Even if Deutsche Bank maintains its operations in the US mostly intact after a deal with Commerzbank, some employees fear that payments and bonuses will decrease because the combined organization will face a negative reaction from German taxpayers if its remuneration is deemed excessive.

Commercebank, which specializes in personal and commercial lending, usually pays its employees less than Deutsche Bank. If the German government had retained a stake in the unified union, lawmakers would most likely have argued that it should tightly control wages.

Sources said traders in Deutsche Bank shares in the US are already under pressure, as some get significantly lower bonuses by 2018.

This contributed to a decrease in morale, which was aggravated by the departure of senior employees, including Brad Kurzman, co-chairman of the equity trading department in North and South America, who leaves at the end of this month, sources said.

The recent efforts to recruit college graduates, which senior management proclaims as a confirmation of the bank’s long-term commitment to the sales department, have done little to ease concerns, they added.
One employee, who asked not to be named, said that further desertions are considered probable, as employees hope to prevent further reductions in the event of a Commerzbank transaction.

(This story corrects a typo in the first paragraph.)


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