Deutsche Bank AG agreed to sell a technology services unit to Tata Consultancy Services Ltd., helping the bank chip away at CEO Christian Sewing’s ambitious job-cutting target.
The two companies aim to finalize 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 ($140 million), it said.
The price tag on the deal is a symbolical euro but it’s still beneficial for the German lender because it can save on future redundancy costs and it also offers a long-term job perspective to PB Systems staff, a person briefed on the matter said. The lender will continue to pay a price for PB Systems’ services that is 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 Postbank’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 Postbank 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.
“We are pleased to deepen our long-standing partnership with Deutsche Bank, continue to help accelerate their digital transformation, and to acquire market specific capabilities in the banking domain,” TCS Chief Operating Officer NG Subramaniam said in the statement.
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. Bloomberg