Deutsche Bank Shares Fall as Restructuring Begins

By WSJ City 

Deutsche Bank shares fell Monday as investors digested details of a huge restructuring of the German lender. Shares were down 1.1% at EUR7.10 having risen in early trade. The bank plans about 18,000 global job cuts by 2022 and its restructuring plan reorders the bank's executive ranks under Chief Executive Christian Sewing, with several senior officials leaving and business lines redrawn for the third time in four years.

"What we have announced today is nothing less than a fundamental rebuilding of Deutsche Bank. [The changes] will bring us closer to our core strength, our DNA."

Deutsche Bank CEO Christian Sewing

KEY FACTS

--- Sewing declined to give a breakdown of the cuts but said they wouldn't be concentrated on one region.

--- The bank will focus on areas where it is most competitive as in the past, "we simply spread ourselves too thin".

--- He added the company received a lot of unsolicited interest in the assets that it plans to exit.

--- Deutsche's struggles have been symptomatic of a broader malaise among Europe's investment banks.

--- Struggling with low interest rates and political uncertainty, Europeans are dominated by US rivals in Europe.

--- Some European banks have pulled back from certain regions and focused on stable core businesses.

--- Deutsche's investment bank -- long its dominant revenue engine -- will be dramatically shrunk and reorganised.

Why This Matters

Even though shares declined on Monday, analysts generally praised the cuts, calling them deeper than expected. But they also expressed concerns that the bank's targets, including its 8% targeted return on tangible equity by 2022, could be too ambitious.

What's Next

Deutsche will focus on serving European companies and retail-banking customers, including wealthy clients. It is aiming to strengthen businesses like asset management, currency trading, corporate-cash management and trade finance that support its narrower focus. Executives are asking investors to believe that their turnaround plans are different, and more attainable, from previous efforts.

A fuller story is available on WSJ.com

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(END) Dow Jones Newswires

July 08, 2019 07:44 ET (11:44 GMT)

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