Deutsche Bank said that it is embarking on a radical transformation to make its business model more profitable, to boost shareholder returns and for bringing in long-term growth.
The restructuring move is likely to cost the bank €7.4bn (£6.63bn) resulting from impairments, restructuring costs and severance payments by 2022.
The German bank expects the restructuring to yield better and less volatile financial results. Revenues are expected to increase from €22.8bn (£20.43bn) in the core bank in 2018 to about €25bn (£20.46bn) in 2022, said the banking group.
In order to execute the strategy, the banking giant will downsize its investment banking operations by a significant extent with a goal to reduce total costs by a quarter by 2022.
Deutsche Bank’s investment banking division will focus on its traditional strengths in financing, advisory, currencies and fixed income. This is likely to grow activity in credit and foreign exchange products among other areas of particular relevance for corporates.
The bank will maintain an equity and macro research capacity and also a targeted equity sales force to continue offering strategic advice to corporate clients.
However, it will exit its equities sales and trading business but will retain a focused equity capital markets operation. In this regard, the bank has entered into a preliminary agreement with BNP Paribas for continued service to its prime finance and electronic equities clients, with an objective to transfer technology and staff to the French international banking group in due course.
As part of its transformation strategy, Deutsche Bank will create a corporate banking division which will serve as the main hub for its corporate and commercial clients and also that of German retail bank Postbank in which it increased its stake to 51% recently. The bank’s global transaction bank division, which is said to serve several national and international corporates, will be at the core of the new corporate banking.
Deutsche Bank CEO Christian Sewing said: “This is a restart for Deutsche Bank – for the long-term benefit of our clients, employees, investors and society.”
“In refocusing the bank around our clients, we are returning to our roots and to what once made us one of the leading banks in the world. We remain committed to our global network and will help companies to grow and provide private and institutional clients with the best solutions and advice for their respective needs – in Germany, Europe and around the globe.”
