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Deutsche Bank is preparing to axe almost half its Postbank branches as Germany’s biggest lender embarks on a shake-up of the group’s lacklustre retail operations.

Claudio de Sanctis, Deutsche’s new head of private banking, told the Financial Times that the lender planned to close as many as 250 of Postbank’s 550 remaining branches over the next two years.

Postbank, which serves Germany’s mass retail market, has been a headache for Deutsche since it took full control of the group in 2010. The decision to make deep cuts to the branch network comes as the bank tries to appease angry customers after a botched IT migration disrupted services over the summer.

Alongside the branch closures, de Sanctis insisted that Deutsche would significantly improve Postbank’s digital offering. With 19mn customers, Deutsche is one of Germany’s largest retail banks but the business has historically been a drag on the overall group’s performance.

While higher interest rates have recently helped the retail business, Deutsche has resolved to make changes. Its separate network of Deutsche-branded branches will also be scaled back, said de Sanctis, while declining to say how many would go.

Despite a deep-rooted habit of using cash in Germany, the country’s dense network of branches has shrunk by 43 per cent over the past decade as customers move online. Lenders have closed more than 15,000 branches since 2013.

The drawn-out and messy migration of Postbank’s 12mn customers to Deutsche’s IT platform, which finished over the summer, has injected greater urgency into efforts to improve online banking.

Shortly after the migration was completed, thousands of Postbank customers were locked out of their accounts and the bank’s helplines were overwhelmed. Germany’s financial watchdog BaFin rebuked the lender over the failures and has installed a special monitor to oversee how the lender fixes the issues.

“At the moment, we’re dealing with a peak of problems that is going to be resolved by the end of the year,” said de Sanctis, adding that the bank had already made “significant progress”. Despite the problems proving a drain on management and adding costs, the episode had “created an even clearer sense of urgency in the group on delivering digital processes and services that deliver proper customer experience,” he said.

“We need to develop a client interface which is the best in the market for the simple basic banking services,” added de Sanctis, who previously ran Deutsche’s wealth management business before being appointed to lead its retail operations earlier this year.

Many Postbank branches have long been unprofitable but Deutsche was unable to close them because of a long-term contract with postal service Deutsche Post DHL. It previously owned Postbank and used the branches to sell stamps and process parcels.

Deutsche has now renegotiated the contract with Deutsche Post DHL, which means it can reduce the joint branch network by the middle of 2026. Of those it intends to keep open, 100 will no longer offer Deutsche Post services, according to people familiar with the matter.

Under de Sanctis’s plan, Postbank’s remaining branches would double up as “tech centres”, troubleshooting problems for customers.

“They [the branches] have to become the place where you get advice, but also go if you have a problem with your app, and we need to be stellar at giving you the solution for that,” said de Sanctis, who declined to say how many jobs will be lost in the branch closures.

The planned restructuring will yield “very significant cost savings and those should more than cover the investment we have to make,” said the 50-year-old, who declined to give further details.

According to people familiar with the matter, de Sanctis has streamlined management layers within Deutsche’s retail operations and also wants to ditch the bank’s stake in digital identity servicer provider Verimy.

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