Around 1,900 jobs are to go in the very near future, including 1,500 in its investment banking arm – much of which is based in London.
That represents around 15 per cent of jobs in the division and is a marked turnaround from the bank’s stance in April, when it insisted no job cuts were needed.
Most of the cuts will fall outside of Germany. More details will be revealed in September at the end of a 100-day strategic review being led by new co-chief executives Jürgen Fitschen and Anshu Jain.
“Difficult economic conditions and financial markets, increased regulatory oversight and litigation are known headwinds for us and the industry. These headwinds don’t excuse us from growth,” Jain said. “Put simply: our cost base is too high.”
Jain also expressed “frustration” that efforts so far have not substantially lowered costs as new pressures from lawsuits and rule changes are driving expenses upward.
The job losses are expected to save around €350m (£274.8m), forming a major part of its €3bn savings target, although the bank has not yet set a date by which it expects to hit the goal.
Overall pay held steady at €3.4bn in the quarter, with performance-related remuneration down nine per cent on poor performance over the quarter.
Cash pay fell 27 per cent, but deferred pay awarded in previous quarters and accrued in the second quarter rose 12 per cent, hampering efforts to cut costs.
A rise in severance payments also hit the bank, contributing to an overall rise in non-interest expenses of €345m on the year to total €6.6bn in the quarter.
Meanwhile revenues fell six per cent from €8.5bn in the second quarter of 2011 to €8bn in the last three-month period, driven by falling activity levels among cautious European clients.
Part of the hit came from the weak euro pushing up the bank’s dollar and sterling cost base.
However, it also suffered from low levels of activity as nervous customers were reluctant to act thanks to the uncertainty caused by the resurgent Eurozone crisis.
Revenues in the corporate banking and securities business fell 11 per cent to €3.5bn on reduced levels of activity.
But some areas of the bank prospered – cash management activity increased in the quarter as the continued flight to safety in Europe prompted more clients to hold cash rather than riskier assets.
That drove a 10 per cent rise in global transaction banking revenues, which reached €972m in the quarter.
The bank also revealed it has disciplined staff over interbank lending rate manipulation. One member of staff in Singapore and one in London left the bank last year as a result.
Although regulators are investigating, there is no suggestion that the manipulation was as widespread as in Barclays, at the centre of the scandal, or that senior staff were in any way involved.