Deutsche Bank AG agreed to sell a technology services unit to Tata Consultancy Services Ltd., helping the bank move closer to Chief Executive Officer Christian Sewing’s ambitious job-cutting target.
The two companies aim to finalise the sale of Postbank Systems AG by the end of the year, according to a statement from Deutsche Bank on Monday that confirmed a Bloomberg News report last month. The bank will take a hit of about 120 million euros ($140 million), it said.
While the price tag on the deal is a symbolic one euro, it still benefits Deutsche Bank because the lender can save on future redundancy costs while offering long-term job prospects for PB Systems staff, a person briefed on the matter said. The lender will continue to pay for PB Systems’ services similar to the inter-company agreements currently in place, the person said.
Tata Consultancy, Asia’s biggest software exporter by market value, will take over PB System’s 1,500 employees in Germany in the deal. Sewing last year unveiled a restructuring plan centered on cutting 18,000 jobs, with about half of those expected in Germany, Bloomberg News has reported.
Germany’s largest lender recently dissolved the formerly separate subsidiary Postbank AG and it’s now trying to wring hundreds of millions of euros in cost savings from eliminating duplication. As part of that effort, it is merging Postbank’s formerly separate IT operations with those of the parent company, which will ultimately render the services provided by PB Systems redundant for the bank.
Tata Consultancy, which has more than 450,000 employees across the world and $22 billion in annual revenue, in 2008 paid $505 million to acquire Citigroup Inc.’s back-office unit in what was then its biggest acquisition. It says it provides services to more than 100 German companies.
“It’s a very important deal that solidifies our position in Germany, already one of our fastest-growing markets,” TCS Chief Operating Officer N.G. Subramaniam said via video. “We can leverage the banking skill sets of Postbank employees to push for further growth; we are already seeing multiple opportunities in our conversations with a number of small and medium German banks.”
Sewing’s job cutting effort has recently hit a roadblock after the coronavirus outbreak led to a short moratorium on dismissals earlier this year and the pandemic made employees less willing to change jobs.
Source: Business-Standard