(Bloomberg) -- Deutsche Bank AG is facing a demand for a 15.5% pay increase at its Postbank retail business, adding to cost pressures for Chief Executive Officer Christian Sewing as he seeks to make good on a pledge to raise profitability.

The demand by German labor union Verdi would affect around 12,000 employees, the Verdi labor union said in a statement Thursday. 

Sewing has pledged to cut expenses and improve profitability, but wage inflation as well as idiosyncratic issues — from costs to fix client service problems to expense overruns at an IT project — have made that goal harder to reach. Claudio de Sanctis, who oversees the lender’s retail business, said last month he sees “no way around job cuts” as he integrates the Postbank operations. 

Verdi said on Thursday that Deutsche Bank agreed to avoid layoffs at least through September next year.

The previous round of collective bargaining was concluded in March 2022, before inflation picked up, said Jan Duscheck, who oversees the banking industry at Verdi and is a member of Deutsche Bank’s supervisory board.

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