Deutsche Bank has announced cutbacks to its bond and equities trading in a major overhaul of its troubled investment bank, .
This year, in the first quarter of 2018, Deutsche Bank, Germany's biggest bank and one of Europe's leading financial institutions, recorded a profit of $146 million. Net revenue for the quarter was down 5 percent year-on-year to 6.98 billion euros.
"We are not strong enough in [some] areas", Christian Sewing, Deutsche's chief executive, said on the group's CIB.
The German bank will reduce its corporate finance businesses in the USA and Asia, pare US rates sales and trading, and review its global equities business with an eye toward downsizing it, according to the statement. He further added, "There is no time to lose as the current returns for our shareholders are not acceptable". A Deutsche Bank veteran who started as an apprentice, Sewing is accelerating a push to refocus the lender on its European home market and reverse a two-decade effort to compete head-to-head with the large Wall Street firms that dominate volatile securities trading. Deutsche Bank said that the drop was less bad if adjusted for a weaker dollar and several one-off effects.
Deutsche Bank CEO John Cryan, left, with Christian Sewing, management board member of Deutsche Bank, during the bank's earnings news conference in Frankfurt, Germany, on February 2, 2017.
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Deutsche Bank fell as much as 4.2 percent before paring losses and trading 0.5 percent lower at 1:11 p.m.in Frankfurt. His plans then, which included thousands of job cuts, came after his predecessor Anshu Jain's attempts to turn the bank's fortunes around.
Deutsche Bank will take another step back from its decades-long global expansion, announcing Thursday that it will focus its investment banking business more on Europe and reduce operations in the US and Asia.
"We have to act decisively and to adjust our strategy". HSBC downgraded shares of Deutsche Bank from a "buy" rating to a "hold" rating in a research report on Monday, January 8th. Sewing said during a conference call with analysts that the announced investment bank restructuring will be implemented "very, very quickly". Their departures, tied to the CEO change, are part of the third high-level shake-up at the lender since Mr. Cryan took over as CEO less than three years ago.
Deutsche's plans will result in significant headcount reductions in the USA and Asia.
Deutsche Bank said the cuts were expected to have a negative impact on revenues in 2018, "but improve our returns in the medium term". The division saw pre-tax profits plunge 74% year-on-year to €205m. He promised that for now, the bank will focus on increasing revenues and reducing costs.