Deutsche Bank has a new CEO after a board meeting last weekend. The two co-CEOs of the past few years had lost the confidence of workers and were seen by the board as indifferent to the bank’s parade of legal troubles. The new CEO, a caretaker in that post, is charged with speeding up the bank’s restructuring, which may ultimately involve laying off half of the bank’s workers in Germany.
HSBC is cutting its staffing by 50,000, half by selling off operations in Brazil and Turkey and the other half by scaling back everywhere else except East Asia. The bank says it can make the 25,000 staffing cuts in its remaining operations through attrition, but that process would take four or five years. It can move so slowly with cuts only if it can somehow stabilize its operations and avoid any further crises.
It is not exactly chaos at Standard Chartered Bank, but the bank is losing top talent and observers agree the new CEO will have to move quickly to cut costs and raise capital.
Greece is resigned to making some of its debt payments late after negotiations with the IMF and European authorities broke off yesterday. The German government in particular has demanded that Greece scrap its national pension system, while the Greek government has not been willing to make any pension cuts at all. If there is a compromise to be found, it will likely involve raising the retirement age by four years, from the current 61–63 to a U.S.-like 65–67. In the interim, there are delays of several years in processing pension applications because of a gap in pension legislation and a large number of applicants.
Some of the deposits taken out of Greek banks in recent months landed in Italy, temporarily taking some of the pressure off the troubled banks in that country. Expect to see a small flurry of bank rescues and failures in Italy after Greece’s situation is resolved.
