Plans for Radical Conversion of Deutsche Bank | Economy | '
It was at the Annual General Meeting of Deutsche Bank in Frankfurt at the end of May. Bank chief Christian Sewing spoke of the "hard cuts" necessary to get Germany's biggest money house back on track. But he did not become more specific. At least in hints but it was clear where the journey could go. Strengthening the retail banking business, strengthening asset management, but less investment banking. Now the plans seem to be taking shape, according to various reports, the Supervisory Board to decide on this Sunday (7 July).
The conversion could be radical, up to 20,000 of the currently 91,000 jobs could be eliminated, especially in investment banking. There are currently 38,000 employees. The division has been in the red for the past two quarters.
Tried to convince the shareholders of its course: Deutsche Bank CEO Christian Sewing at the Annual General Meeting on May 23
Back to the roots – too late?
So the stock and bond business is set to shrink, in weddings under the brilliant as well as controversial investment banker Anshu Jain the bank's money press. But also with criminal energy: From the trickery of "Anshus Army", as the troop was called bankintern, stir most of the criminal and settlement payments, which have driven the bank in recent years, almost ruined.
The banking expert Thomas Hartmann-Wendels of the University of Cologne can not convince the previously announced plans. While it is clear that there is an urgent need for action, he says in a conversation with ‘: "Cosmetic surgery is no longer enough." As a result, bank chief Sewing "has come at some point with major measures, but the convincing strategy is not yet apparent."
The market in Germany in particular is very fiercely contested with savings banks and cooperative banks, which have a high market share and are close to the customer. Since it is difficult for all banks to assert themselves in this market. "Where is the big litter for the Deutsche Bank, that has not yet become clear."
The Hüh and Hott strategy
With the entry into investment banking, the German once wanted to rise in the top league of the banking industry. It all began 30 years ago with the purchase of London bank Morgan Grenfell, nine years later – in 1998 – the takeover of Bankers Trust in New York followed. For a while, the business was splendid, ex-bank boss Josef Ackermann even fabulierte of a desired return on equity of as much as 25 percent. Today, the bank would be happy if it could create four percent: This is the current target of the acting boss Christian Sewing; but his house is far from reaching this goal. It will probably be cut.
If Sewing's plans were to be approved by the controlling body, this would amount to a strengthening of the so-called transaction bank – ie the normal payment transactions for private and business customers. For payments in euros, Deutsche Bank sees itself as the number one, worldwide, the bank handles five percent of currency trading. Recently, Sewing spoke of a "pearl of business" at the Annual General Meeting. But even here, banking expert Hartmann-Wendels is skeptical, "because payment traffic is also a very hotly contested area, on which increasingly efficient fintechs are on the way." Whether the large sources of income lurk there is more than questionable. "
And finally one Bad bank
The asset management, ie the business with the super-rich, should also be strengthened. There will be no dismissal, on the contrary: the head of the division, Fabrizio Campelli, told the news agency Reuters, he wants to hire 300 new managers in the next two years. The private customer business does not look that good, and the number of branches is likely to shrink further. Last Friday it became known that with the integration of the Postbank into the German bank probably further 2000 places will be omitted. And no longer needed or too risky financial instruments such as derivatives (and of which Deutsche Bank has ample) could be relocated to an internal so-called bad bank, this had recently leaked out. According to insiders quoted by the Reuters agency, this could amount to a volume of up to 50 billion euros.
Remains the conclusion: The German Bank wants to become German again. No longer in the top league of investment banks, in which you had never really made it, but focus on the home market. At least that had become apparent in broad terms. Now the contours become sharper. But better too? For Professor Hartmann-Wendels, a risky strategy: "That will be very difficult, because savings banks and Volksbanks are very well established here and have never done anything else." Customers would find these houses very reliable, while at Deutsche Bank, "every few years, they believe they recognize a new strategy and ask themselves: how long will that hold again?"
At least on the stock market, the plans for the moment are well received. Already on Friday, Deutsche Bank's most recently battered share gained three percent, which was also the positive second part of the stress test in the US. On Monday, the paper went up another two percent.
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