When Deutsche Bank’s Americas CEO, Christiana Riley, told Bloomberg on Tuesday that “the demise of New York is vastly overstated,” she may have been referring to her own earlier proclamations.
Riley confirmed Tuesday to the wire service that the bank plans to return 5,000 employees to New York over the next six months. But as recently as last December, Riley told the Financial Times that about half of the German lender’s New York-based employees could "conceivably" move to "smaller hubs and pockets" by 2025.
“I'm optimistic that New York remains, to a degree, a hub," Riley told the publication in December. "You will continue to have significant amounts of institutional capital sitting in and around New York that will make it meaningful for there to be a centralized presence in New York ... but that isn't maybe going to be relevant for all of those people."
Deutsche, for its part, maintains at least two U.S. hubs outside of New York: about 2,000 employees — specializing in human resources, compliance and risk — in Jacksonville, Florida, and another 600 tech-centric workers in North Carolina's Research Triangle.
And at the end of last year, some banks — notably, Goldman Sachs reportedly weighed moving its asset-management business to South Florida — had the impulse to eschew New York in the name of cost savings.
Deutsche, it should be noted, is more than two years deep in a three-year effort to slash a quarter of its costs, including shedding 18,000 jobs.
The German lender was also an early adopter of a long-term remote-work strategy, telling its New York-area employees in September 2020 that it didn’t expect them back in the office until July 2021. That timing coincided with the expected opening of a new U.S. headquarters in Columbus Circle — incidentally, the site of Tuesday’s Bloomberg interview.
In that kernel lies a dichotomy: Both lines of Riley’s thinking can co-exist. From a cynical standpoint, Deutsche could eye a return to the office for its 5,000 New York-area employees in the next six months, then plan for them to scatter in four years. And the bank’s new headquarters would go that much further toward looking like a worthwhile investment.
Seeing multiple arguments
Deutsche’s thinking is hardly unilateral. It sees the value in remote work. CFO James von Moltke told employees in April the bank would let them work from home 40% to 60% of the time, going forward. And yet the lender also sees a social cost to that benefit.
The bank’s researchers proposed in November 2020 that Americans who work from home voluntarily after the COVID-19 pandemic should pay a 5% tax. That money — $48 billion per year, by Deutsche’s figures — could fund grants of $1,500 for the 29 million U.S. workers who must work on-site and earn less than $30,000 per year, excluding those who earn tips, the researchers said.
This month, the bank told clients in a report it expects offices in financial hubs such as London and New York to refill quickly, citing increased ridership on public transit as a signal that the remote-work “honeymoon” is waning.
“People are starting to realize that the freedom of work-from-home does have some downsides: dilution of company culture, coordination issues, and even the mental well-being of some workers,” Marion Laboure, a Deutsche Bank, said in the report, according to Bloomberg.
Riley, speaking to the wire service Tuesday, said, “We’re thrilled to see the ecosystem in New York coming back to life.”
She said the bank expects to expand organically in the U.S. — though not through acquisitions — and boost its market share after right-sizing over the past couple of years.
“We made difficult decisions around shedding businesses that weren’t successful, weren’t profitable for us in this market,” Riley said.
As for office returns, a Deutsche survey, included in this month’s report, found that people expect to continue working remotely two to three days a week once the COVID-19 pandemic subsides.
However, although employees saved money by not commuting, new workers are bemoaning a lack of connection with their peers, inner-city businesses have been hurt by a lack of foot traffic, and home-based employees have found themselves more vulnerable to cyberattacks, Laboure said.