Amid the growing trend of using mobile and online banking, the need for brick-and-mortar branches is gradually diminishing. In sync with this, Deutsche Bank DB is planning to close about 20% of branches located in Germany. This was first reported by Reuters.
At a conference in Frankfurt, Philipp Gossow, head of Deutsche Bank’s retail banking business, noted that amid the coronavirus crisis customers are mostly using online methods for banking instead to visiting branches. Thus, the company intends to lower the number to around 400 by closing branches in urban area “as quickly as possible.”
The focus will be on those cities where Deutsche Bank operates multiple branches. Gossow, further added that these efforts “offer a big opportunity to permanently become simpler and more efficient.”
This move follows a similar action taken in 2016, when Deutsche Bank slashed the branch numbers to present 500 from more than 700.
It is to be noted that Deutsche Bank is in the midst of a major business overhaul (which began in December 2019) that includes less focus on investment banking activities, shrinking balance sheet and cutting 18,000 jobs by 2022. In fact, the job cuts related to the branch closures will be part of the above-mentioned figure.
For Deutsche Bank, which has been incurring losses for the past several quarters, these restructuring efforts are likely to support financials.
Shares of this Zacks Rank #3 (Hold) firm have gained 7.3% over the past year against the industry’s decline of 32.7%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Other Banks Taking Similar Actions
Several Europe and U.S.-based banks are consolidating branch network, given increased use of online methods by customers. These efforts are expected to save costs, going forward. PNC Financial PNC, which already had plans to close branches, now intends to accelerate the same and will be shutting almost 280 branches by the end of the next year.
Further, Credit Suisse AG CS intends to shut down about 25% of its branches in Switzerland, per Reuters. The move comes amid the bank’s focus on enhancing its digital banking capabilities and reducing annual costs. Likewise, ING Groep N.V. ING CEO Ruud van Dusschoten, in an interview to De Telegraaf in July, stated plans to close 25% of the total 170 branches in Netherlands.
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