Deutsche Bank Looks to Shed Big Chunk of Wall Street Presence

By Jenny Strasburg and Telis Demos 

Deutsche Bank AG is taking steps to dismantle a pillar of its Wall Street investment bank.

The troubled German lender has had discussions with Citigroup Inc., BNP Paribas SA and others that could involve transferring parts of its once-prized equities business, including operations that serve hedge funds and other big trading customers, according to people familiar with the matter.

The moves portend a dramatic reshaping of Deutsche Bank's U.S. investment bank, a business it battled the likes of Goldman Sachs Group Inc. and Morgan Stanley to build. Without a muscular equities trading operation, Deutsche Bank will occupy a much smaller footprint when competing with healthier U.S. rivals that have come to dominate their European counterparts in the postcrisis era.

No agreements have been reached in what one of the people close to the matter described as complex talks involving multiple parties. Any deal is being weighed against the costs Deutsche Bank would face to shut businesses, including severance costs, and costs to hold on to long-dated derivatives positions.

Spokespeople for Citigroup, BNP Paribas and Deutsche Bank declined to comment.

The talks are happening as the once-formidable German bank prepares a major reorganization aimed at shedding thousands of jobs and downsizing or abandoning whole business lines. Its equities business, in which its prime brokerage sits, was once a key revenue driver within the investment bank. It is now among those on the chopping block as the bank ends long-frustrated efforts to compete in an area dominated by stronger rivals, the people say.

The discussions, which are ongoing, could involve Deutsche Bank employees moving to one or more other banks alongside client balances, systems, and derivatives positions, some held by Deutsche Bank to offset bets taken by its clients. The talks have included corporate derivatives positions Deutsche Bank has looked to shed, one of the people said.

Write to Jenny Strasburg at [e-mail] and Telis Demos at [e-mail]

(END) Dow Jones Newswires

July 02, 2019 13:27 ET (17:27 GMT)

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