Dresdner Bank is to implement a further round of expense-related job cuts that will take total staff losses at the German bank to 7,800, or 15% of its workforce, by the end of 2003.
Dresdner Bank, which employs 51,000 people, has confirmed that it will axe 1,300 jobs by the end of 2003 on top of the 5,000 that were announced at the bank's general meeting last year.
The cuts come on top of 1,500 job losses planned for Dresdner Kleinwort Wasserstein, the investment banking unit, that were announced at the end of July. Some of those have already been made, including the bank's withdrawal from Asian equity markets in August.
Dresdner has one of the highest expenses bills in its peer group, partly due to retention payments that were made to investment banking staff after the bank failed to merge with either Deutsche Bank or Commerzbank in 2000. Earlier this year, when it was bought by Allianz, the German insurer, Dresdner said that staff would not be heavily compensated to stay since this would undermine the cost savings that it hoped to achieve by cutting staff in the first place.
Of the 5,000 jobs that Dresdner originally said would be lost, 2,300 have been made already. The remaining 2,700 will still be cut as planned and with the further 1,300 coming from across the group.
The bank attempted to reassure staff by saying in a statement that the cuts would be made through "natural attrition" such as "partial retirement, part-time work and early retirement".
Dresdner said that the entire staff reduction plan would cost €700m ($646m), which is more than half of the first year's projected savings of €1.3bn. However, the bank said that it will save €1.3bn every year after the job cutting programme is completed at the end of 2003.
To date, €300m of the €700m bill has been spent on the 2,300 job cuts made so far, leaving €400m for the remaining 5,500 staff losses in the total programme. A recruitment specialist in London said that the 'natural attrition' strategy preferred by Dresdner would cost more than an aggressive programme of outright redundancies, as has been the case in the investment bank.