Category Archives: Finance News

Deutsche Bank reportedly considering up to 20,000 job cuts

A man walks past Deutsche Bank offices.

Luke MacGregor | Reuters

Deutsche Bank is considering cutting 15,000 to 20,000 jobs, or more than one in six full-time positions globally, the Wall Street Journal reported on Friday, citing people familiar with the discussions.

The layoffs would probably take place over more than a year and would spread across regions and businesses, the Journal said.

Top-level talks about the restructuring took place on Thursday and Friday, but no final decisions have been made, a source close to the matter told Reuters.

Deutsche Bank is completing a plan that may eliminate hundreds of positions in equities trading and research, as well as derivatives trading, as part of a broad restructuring, Bloomberg reported on Friday, citing sources.

Sources told Reuters last week that the bank plans to cut the size of its U.S. equities business, leaving only a skeleton operation in place to service corporate and high-net-worth clients.

Members of Deutsche’s supervisory board discussed those plans on a call earlier this month and agreed that large-scale cuts were necessary in the bank’s U.S. equities and rates trading businesses, Reuters reported, citing the sources.

Chief Executive Officer Christian Sewing is trying to convince investors he can turn around Germany’s biggest bank, whose shares hit a record low this month. He told investors at the annual meeting last month that Deutsche was prepared to make “tough cutbacks” at its investment bank.

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The executive in charge of Facebook’s currency says he’d love somebody with central banking experience to help lead it

David Marcus, vice president of messaging products for Facebook Inc., speaks during a Bloomberg Television interview on the sidelines of the Wall Street Journal D.Live global technology conference in Laguna Beach, California, U.S., on Wednesday, Oct. 18, 2017.

Patrick T. Fallon | Bloomberg | Getty Images

David Marcus, the Facebook exec who helped hatch its Libra digital currency project, said a managing director with experience in government and central banking would be a great leader for the independent group that will actually oversee the currency.

“We need someone who knows how economies tend to work, who understands how to operate in a very complex, decentralized governance type of environment,” Marcus told The Information in a Q&A published on Friday.

“And we need someone who has the gravitas to be able to carry the message on behalf of all the members — the hundred members and more of the association when this thing goes live — rather than have each and every one of us have piecemeal conversations left and right with all of the different governments and regulators that this whole network will be subject to.”

Last week, Facebook announced Libra, a digital currency the company has been building using blockchain technology. Facebook also announced the Libra Association, a nonprofit organization that will manage the digital currency, and Calibra, a digital wallet where Facebook users will be able to hold the currency.

In his Q&A, Marcus also denied a Tuesday New York Times report that banks like Goldman Sachs and JPMorgan Chase had rejected Facebook’s invitation to join the Libra Association.

“I want to absolutely and strongly deny the fact that we’ve approached banks and banks have said no,” Marcus said. “We have had conversations with banks. We still have conversations with banks. And my expectation is that by the time this thing launches next year you will have banks that are going to be members of this.”

You can read the full Q&A on The Information.

WATCH: Here’s how to see which apps have access to your Facebook data — and cut them off

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Dish grabs much-needed leverage as it talks to Deutsche Telekom and DOJ about becoming fourth wireless network

Charles Ergen

Andrew Harrer | Bloomberg | Getty Images

Dish co-founder Charlie Ergen is back in wireless acquisition talks after several failures over the last six years.

But this time, if Ergen can convince Deutsche Telekom, U.S. regulators and a group of state attorneys general that his company can be a knight in shining armor, he may end up saving not only T-Mobile’s deal for Sprint, but also his own company’s prospects.

The Department of Justice is still weighing whether it will approve a merger between T-Mobile and Sprint. The big question surrounding the deal since its announcement more than a year ago is if regulators will allow the U.S. wireless market to go from four competitors (Verizon, AT&T, T-Mobile and Sprint) to three.

That’s led the DOJ to look for a solution that would create a new fourth competitor if it allows T-Mobile and Sprint to merge.

Regulators believe Dish is uniquely positioned to become that fourth U.S. wireless provider, according to people familiar with the matter. That’s because Dish has spent the last decade acquiring nearly $20 billion of wireless airwaves through acquisitions and government auctions.

Dish may also have an edge with T-Mobile majority owner Deutsche Telekom because it would pose less of a threat than a larger company such as Amazon.

But Ergen’s hardball negotiation style and state regulators could still scuttle a deal.

Details of talks

Talks between Dish, U.S. regulators and Deutsche Telekom are already underway and will continue next week, CNBC previously reported.

The talks revolve around Dish using the Sprint/T-Mobile network to host Dish’s spectrum, according to sources familiar with the matter.

Dish would use the Sprint/T-Mobile network only until it has built its own rival network, which may take years and cost billions of dollars. The focus of the discussion now is how long Dish will be able to use the network and the economic terms of a revenue-sharing deal, two of the people said.

Dish would also buy prepaid carrier Boost Mobile and additional spectrum as a divestiture to clear regulatory hurdles. But the Boost/spectrum acquisitions aren’t the focus of the ongoing discussions between the companies, and won’t make or break a deal, said the people. A Dish spokesman declined to comment.

Deutsche Telekom and Japan’s SoftBank, the majority owner of Sprint, aren’t particularly concerned with enriching Dish as a competitor, two of the people said. They know Dish will only use their network for a set amount of time, and the cost of building a new network could keep Ergen at bay for years, they said. This makes Dish a more appealing partner than a company like Amazon, which has a much bigger balance sheet (and scale to poach customers) and has reportedly expressed interest in buying Boost.

Still, Dish does pose a threat to a combined T-Mobile/Sprint because it will have an incentive to undercut prices immediately to build up a subscriber count, said MoffettNathanson telecommunications analyst Craig Moffett. T-Mobile CEO John Legere, who is set to lead the combined company, has already promised not to raise prices for three years if a deal is completed.

“By putting Dish into business with no existing subscriber base and no existing ARPU [average revenue per user] to protect, the only available strategy for Dish is to aggressively underprice,” said Moffett. “It’s almost unimaginable Deutsche Telekom would have any appetite where a solution would so radically destabilize the industry. It would be a Pyrrhic victory.”

Even if Dish can reach a deal with Deutsche Telekom that placates the DOJ, it’s still not clear a T-Mobile/Sprint deal will happen. The California Public Utilities Commission needs to approve the deal before it can close. And then the companies will need to battle 14 state attorneys general who have sued to block a deal. That trial is set for Oct. 7.

Dish’s spectrum deadline

Meanwhile, the government wants Dish to put its treasure trove of spectrum to use.

Dish promised the Federal Communications Commission in 2013 that it would provide broadband coverage to 70 percent of the population in the 176 markets by March as part of a $3 billion purchase of spectrum from two bankrupt operators, TerreStar and DBSD North America.

With the deadline less than a year away, Dish isn’t even trying to build a new wireless competitor as the government had hoped. Instead, Dish’s plan to meet that requirement has been to build a narrowband (not broadband) network for wholesale “internet of things” usage, rather than for consumer wireless purposes. The company’s reasoning for waiting: Why build an LTE network when the technology is just going to be obsolete? Better to wait to build a 5G network.

If the FTC doesn’t approve, Dish risks losing $3 billion of airwaves. Ergen is pushing the FCC to drop its March deadline as part of discussions with Deutsche Telekom, Bloomberg reported earlier this week.

For Dish, a deal would give the company a much needed new direction. Dish’s satellite TV business has been hemorrhaging customers for years. Its Sling TV subscriber growth has slowed dramatically, adding just 7,000 new customers last quarter. Dish investors have stuck with Ergen because they believe he’ll either find a way to build a wireless network or sell his $20 billion in spectrum. But shareholders haven’t been particularly optimistic about his prospects: Dish shares are down about 38 percent over the past five years.

Wireless M&A failure

Dish has talked about building a wireless network for years but has always wanted a partner to diffuse the cost. But it’s never been able to land this partner, despite trying several times.

In 2013, Dish bid on mobile service provider Clearwire but lost out to Sprint, which topped Dish’s bid.

Later that year, Dish made a $25.5 billion offer to buy the majority of Sprint, itself. Again, Dish lost out — this time to SoftBank.

Dish moved on to trying a merger with T-Mobile in 2015. But talks never got close to a deal because of concerns over structure and valuation — particularly because Deutsche Telekom felt Dish stock was severely overvalued.

Ergen “is a hard negotiator,” Erik Prusch, who was Clearwire’s CEO at the time, told CNBC last year. “His structures and how he wanted to participate in the economics was always a little bit less straightforward, and that made it challenging to become a partner with him.”

Between Ergen’s reputation for balking at deals, Deutsche Telekom’s hesitance to enrich a long-term competitor and the threat of regulators blocking the deal, the chances that a T-Mobile/Sprint deal actually gets through are still probably less than 50%, said Moffett.

“I’m skeptical that we’ll ever see a deal,” he said. “It may be that Sprint and T-Mobile take the ball all the way down to the 1-yard line, and it simply may not be possible to punch it across the goal line.”

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