Published: Fri, April 27, 2018
Health Care | By Belinda Paul

New Deutsche Bank Boss To Slash Investment Bank In US

New Deutsche Bank Boss To Slash Investment Bank In US

Sewing said that job cuts, which will be focused on the investment bank, would be made over the course of 2018. German and European wealthy clients and companies will get more funding and attention from Germany's biggest bank, Deutsche Bank said. The actions reflect pressures on the lender to scale back its global ambitions and cut costs after years of losing market share to stronger banking rivals. Amundi Pioneer Asset Management Inc. bought a new stake in Deutsche Bank in the 4th quarter valued at $303,402,000. Fees from capital markets underwriting and mergers and acquisitions advice, meanwhile, sank 27% to €480m, with the steepest fall (50%) coming from equity origination.

Earnings from Germany's flagship lender fell short of analysts' expectations in the first quarter.

Deutsche said on Thursday: "The bank will scale back activities in U.S. rates sales and trading, shrinking the balance sheet, leverage exposure and repo financing while remaining committed to its European business, which given its scale and relevance to our client base generates more attractive returns". Earlier this month, JPMorgan analysts recommended that Deutsche pull back from its United States operation - particularly equities and rates - to unlock value for shareholders.

The Frankfurt-based bank also said it would slim the top management body to nine executives from 12 and eliminate the practice of having co-heads of departments in an effort to speed decision-making. The bank will also continue to shed real estate.

Yet the aggressive expansion eventually led to a spate of legal scandals that took Cryan a good part of his three-year tenure to clean up. Big questions remain about where they go next-and at Deutsche whether the new chief executive, Christian Sewing, really can make any big changes. Bank of Montreal Can lifted its holdings in Deutsche Bank by 318.5% in the fourth quarter. Investors and analysts have been demanding that executives clarify the bank's strategy, with some saying its USA investment bank should give up competing head-to-head with bigger, stronger US competitors. He was a proponent of expanding Deutsche's investment bank to compete globally with U.S. rivals, which have largely taken market share from European banks since the financial crisis. That includes the reduction of its investment banking business outside of its core client area of Europe.

Even compared to other European investment banks still battling through multiyear turnarounds, Deutsche Bank's challenges are vast, investors say.

The corporate and investment bank will be shifted to focusing on its European and multinational clients, "while reducing its exposure to other areas".

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