Deutsche Bank denies its 18,000 job cuts will hit IT contractors

Deutsche Bank has denied that any IT contractors are affected by its 18,000 job cuts, despite anecdotal reports by some freelance technologists that they were sent packing “immediately”.  

Clarifying the scale of last month’s “significant reduction” to its 97,100-strong workforce, the Frankfurt-headquartered bank told ContractorUK that the cuts only affected ‘FTEs.’

In fact, it is understood that such ‘Full Time Employees’ will number only 74,000 once the £5.4billion job-reduction programme ends in 2022, but “externals” like IT contractors were not said to be in scope.  

'Notice money'

However the stories of IT contractors being asked to leave when the cuts were tabled last month still seem believable, given that an ‘internalisation’ of 5,000 external techies is ongoing at Deutsche Bank.

So instances of IT contractors leaving the bank’s London operations (including one who was apparently given six weeks’ ‘notice money’), will continue because not all ‘externals’ in IT will wish to ‘internalise.’

Speaking about the IT contractor internalisation programme on a conference call last month, Deutsche Bank’s CFO James von Moltke made clear that its savings would be on top of those realised by the £5.4bn job-cutting programme.   

'Internalising the 5,000'

“We will also benefit from savings made in internalising the 5,000 external IT contractors that we have, principally within our corporate and investment bank.

“These programmes, which began in 2018, will generate about €300 million of net savings by 2022,” he said. “We will continue to invest, but our delivery will improve.”

Also on the call, Mr von Moltke added that Deutsche’s IT spending remained on track to hit a record high in 2019, as part of the bank’s total technology spend coming in at £11.9billion by 2022.

'Redressing the balance'

The thinking inside the bank is that external IT providers will continue to play an ‘important role’, as one Deutsche Bank insider put it, as the internalisation programme is largely “just a case of redressing the balance [between perm and contract].”

Yet having fewer workers off-payroll equates to fewer workers that Deutsche Bank will have to assess for IR35 under reform of the rule in April 2020 -- a process some financial firms deem so arduous, and potentially taxing, that they have tried to bypass it altogether.

“A large chunk of our vendor and external population are outside the UK,” the Deutsche Bank insider said, suggesting there to be no link between the German bank’s contractor-internalisation programme and the UK-specific tax reforms.

'Undoubtedly continue to hire contractors post-2020'

Reassuringly though for UK PSC contractors, the insider said that even once the 2020 legislation is in force from April 6th, the bank’s UK divisions will “undoubtedly continue to use specialist individual contractors,” while still ensuring compliance with new IR35 framework.

The development comes as John McDonnell, the shadow chancellor, has reportedly written to Boris Johnson to inform the prime minister that his choice of chancellor, Sajid Javid, is not suitable due to the latter’s extensive career with Deutsche Bank.

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Written by Simon Moore

Simon writes impartial news and engaging features for the contractor industry, covering, IR35, the loan charge and general tax and legislation.
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