Editor’s note: This story was updated on Oct. 6 with additional comments from Deutsch

Deutsch New York is laying off an estimated 19% of its staff, Ad Age has learned.

Laid-off employees were informed by letter and told they would be employed until the beginning of the year, at which point they would receive severance, according to one person close to the situation.

A spokeswoman for the agency would not confirm the number of layoffs, but the shop filed a WARN notice with the New York State Department of Labor that specifies 41 employees were affected.

Deutsch New York employed 215 people at the end of 2022, based upon information it provided to Ad Age Datacenter for Datacenter’s annual Agency Report. Using that figure, the number reported in the WARN notice would imply layoffs of about 19% of the agency.

The agency attributed the staff reduction mainly to the loss of the PNC Bank account in June of this year to Havas’ Arnold Worldwide. PNC Bank spent an estimated $159 million on U.S.-measured media in 2022, according to Vivvix, including paid social data from Pathmatics.

But the layoffs extend beyond people working directly on the account and extend to Deutsch New York's studio, human resources and in-house public relations department.

“Guided by the economic realities and in response to the loss of PNC Bank this summer, we needed to adjust accordingly by restructuring and right-sizing the agency,” according to an agency statement given to Ad Age. “We acknowledge how difficult and sad this is, especially for the team members directly affected, and we are grateful for their contributions and dedication to Deutsch NY. While we have taken great pains to refocus existing resources, including the reduction of real estate costs, these are gut-wrenching actions but necessary for the health of our business.”

The statement continued: “We are taking care of these individuals as best we can—including retaining them through the end of the year, assisting them in finding other job opportunities, providing severance compensation and health care benefits consistent with our longstanding policy.”

An agency spokeswoman said on Oct. 6 that the layoffs are due to a reorganization as part of an adoption of a permalancer model with staffers flexing in and out based on demand, and that the shop is “reshaping staff for 2024 with a tech-driven transformation approach.”

Deutsch, the agency founded by David Deutsch and run by his son, TV personality Donny Deutsch, until 2015, was sold to IPG in 2000. In October 2020, the shop split into two separate entities—Deutsch NY and Deutsch LA—and since then the New York agency has struggled compared to its LA counterpart. A year after the split, the LA agency made the Ad Age A-List.

While the New York office once counted among its clients Anheuser-Busch InBev, Reebok and Microsoft, its current client roster is thin. Its main clients are Galderma’s Cetaphil global and Differin brands, VillageMD, Kenvue’s Lactaid, CityMD, Dr. Praegers and Betway, according to the agency. But several of those clients are project-based, according to the person close to the agency.

On Oct. 6, Deutsch denied that most of its work is project-based, and said it has recently won four new agency of record assignments it could not disclose for client confidentiality reasons.

In September, Samira Ansari, chief creative officer of Deutsch New York since May of 2022, decamped to Ogilvy, New York, where she is currently chief creative officer.