Germany’s Banks Start Ditching Offices as Remote Work Soars
Banks in Germany are rapidly cutting back on office space as a rising number of staff work from home, putting them at the vanguard of a global shift that could permanently change the way bankers work.
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Banks in Germany are rapidly cutting back on office space as a rising number of staff work from home, putting them at the vanguard of a global shift that could permanently change the way bankers work.
Deutsche Bank AG is vacating several floors in a building housing about 1,000 employees, HSBC Germany is ditching six separate offices in Dusseldorf for one new one with less than half the space, and BNP Paribas’s unit in Frankfurt is cutting the amount of desk space to cover just 60% of staff. Regional lenders DZ Bank AG and BayernLB say they’re assessing similar plans.
The pace with which the banks in Germany are transforming their real estate footprints is setting them apart even from European peers which have issued generous work-from-home policies for the post-pandemic world. Lenders embracing the home office trend to cut costs also underlines the divide between Europe and the U.S., where the likes of Goldman Sachs Group Inc. are holding on to the in-person model.
The real-estate cuts have been made possible by a new openness to remote work that was ushered in by the heavy restrictions on mobility imposed by the Covid-19 pandemic. Most European banks have unveiled flexible work policies that generally allow most staff to work from home for two or three days per week. As a result, many have switched from assigning work stations permanently to models where employees take an available desk each time they come in for work -- so-called “hot-desking.”
Lenders including Credit Suisse Group AG, UBS AG and UniCredit SpA have said they will ultimately end up occupying less office space, but few outside Germany have yet disclosed any concrete moves toward smaller premises post-pandemic.
Reducing office space usually happens slowly as many leases run for ten years or even longer and terminating agreements ahead of time can trigger steep compensation payments. In addition, many banks have only recently decided just how much work from home they will tolerate and which roles are suitable for it, meaning planning the future office layouts can only now begin in earnest.
Almost 40% of all employees in Germany’s service industries worked at least partially from home in June, according to a survey from the research firm Ifo published Monday. That compares with an average of close to 30% for the economy as a whole.
Some of the lenders at the forefront of office reductions including Deutsche Bank and BNP Paribas had previously initiated the moves, making it easier to accelerate them when the pandemic hit. The German lender has yet to roll out across Germany a new office design that puts a higher emphasis on shared desks and conference spaces, internally known as the Future of Work program.
Many banks in Germany face intense pressure to cut costs and have identified outlays tied to leasing and maintaining offices as one avenue. Those expenses are typically among the biggest cost drivers for banks, after salaries and IT expenses.
“While their U.S. counterparts have been adamant about returning to an office-centric culture, German banks have been willing to embrace remote work and talk openly about ditching office space en masse,” said Dror Poleg, co-chair of the Urban Land Institute’s Technology & Innovation Council in New York.
