Deutsche Bank Lured Staff to Florida. What Comes Next Is Secret

LAGOS (Capital Markets in Africa) – They live in rows of tidy townhouses, setting out early every weekday for a short walk to Deutsche Bank AG’s lush corporate campus. For the closest, it’s just across the street.

For the past several years, Deutsche Bank has been persuading harried Wall Streeters to move to Jacksonville, Florida, where it was building out operations to handle more of the firm’s business at a lower cost. Veterans who accepted the posts said that even as the bank reined in pay they felt richer in those suburbs than they had in Manhattan. Many shared their skills with local recruits, who came cheaper still. Some said they were in it for job security.

Since the Frankfurt-based bank embarked on a new plan this week to slash a fifth of its 91,000-person workforce, employees have been seen emerging from its offices in London, New York and other global financial hubs clutching envelopes that outline their severance. But in Jacksonville, the view from the edge of its campus was serene on Monday. People coming and going were coached not to talk with the media. A company spokeswoman declined to comment on potential reductions there, reiterating an earlier statement that the bank aims to become “leaner and stronger so we can offer a better service to our clients.”

Even city hall had no information to offer. Mayor Lenny Curry hasn’t been informed of any cuts in town “at this time,” spokeswoman Nikki Kimbleton said late Monday.

Career Choices
The fate of Deutsche Bank’s staff in Jacksonville is of particular interest to members of the U.S. financial industry because many professionals have faced similar career choices in recent years. To cut costs, Wall Street banks are “near-shoring” legions of jobs to cities far outside New York — such as Salt Lake City, Nashville, Tennessee, or Austin, Texas.

The pitch is that paychecks go further in those places, buying waterfront homes and covering private school tuition. The catch is that it might be a one-way career move. If a Wall Street professional gets laid off far outside New York, there may be few, if any, competing firms to join.

Read more: Wall Street banks are hiring across U.S., not so much in New York

Over a decade, Deutsche Bank expanded from an initial staff of 100 in Jacksonville to roughly 2,250 people, including some in trading functions and other investment banking businesses. Its sprawling campus there features an artificial pond surrounded by manicured lawns and palm trees. Some employees snapped up homes in the neighborhood to eliminate once-hectic commutes. Others bought properties closer to the Atlantic shore.

The German bank now ranks amid American firms as the city’s seventh-largest financial-industry employer. It might make sense for the lender to keep its presence there as it focuses anew on lowering costs. JaxUSA Partnership, a division of the local chamber of commerce, estimates that a financial analyst in Jacksonville makes about $68,400, compared with $110,300 for the same position in New York.

City’s Strength
Even if the firm does cut local staff, Jacksonville has persuaded a variety of other companies since the financial crisis to build out their presence, taking advantage of the cheaper labor market, lower rents, desirable weather and non-existent state income taxes. Among the firms in Jacksonville today are Bank of America Corp., Citigroup Inc., JPMorgan Chase & Co. and Wells Fargo & Co., as well as the health, information technology and manufacturing industries.

So if Deutsche Bank retreats, some of those firms may need the talent it leaves behind. To be sure, many mainly employ staff in back-office roles, including accountants and lawyers. Trading staff may have a harder landing.

The city’s economy, though, is strong enough to weather even the loss of a large portion of Deutsche Bank jobs, assuming the office doesn’t close altogether, said Jacksonville University economist Carol Dole.

“No matter what happens to Deutsche Bank, Jacksonville is going to be able to handle whatever changes occur,” she said.

Source: Bloomberg Business News