Deutsche planning major reorganisation
(6 March 2017 – Europe) Deutsche Bank plans to raise capital, list its asset management business and overhaul its business structure as it tries to reinvent itself after spending two years dealing with its past misdeeds and huge losses.
The strategic revamp, decided at a supervisory board meeting on Sunday, follows a net loss of 1.4 billion euros last year and is part of the lender's push to draw a line under a string of scandals that have hammered its balance sheet since 2012.
The decision marks a retreat from a strategy announced less than two years ago when the bank separated its investment banking and markets business, and heralds its fourth capital hike since 2010.
"On strategy, it's obvious we had a change of heart," Chief Executive John Cryan told journalists.
"These measures will make Deutsche Bank stronger and place us back firmly on a path to sustainable growth".
Deutsche plans to launch an €8 billion (A$11.3 billion) rights issue of 687.5 million new shares on 21 March.
The bank said it also plans to list a minority stake in its asset management business and sell off other assets to raise a further €2 billion which, with the rights issue, should take its capital ratio above 13 percent.
Deutsche will reunite its cash cow securities trading unit and corporate finance business under one roof, having separated them in 2015. The bank said those divisions, which will be combined with its transaction banking group, will now focus predominantly on serving corporate clients and less on institutional ones such as pension and hedge funds.
In another about-face, the lender scrapped plans to sell its Postbank unit, saying it was unable to do so at an acceptable price. Instead, it now wants to reintegrate the operation into its other German retail business.
"We are very positive over prospects of banking in Germany," Cryan said.
Those measures mean the bank will have just three business divisions going forward: a private and commercial bank focused on Germany, a corporate and investment bank, and its asset management business.
Deutsche will promote retail banking head Christian Sewing and finance head Markus Schenck to oversee the revamp as co-deputy CEOs alongside Cryan.
Schenck will also become co-head of the investment bank alongside Garth Ritchie, who currently heads the bank's bond and equities trading activities. Jeffrey Urwin, head of corporate and investment banking, is expected to step down later this year.
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