Deutsche Bank weighs further cutbacks at securities unit

Deutsche Bank, which runs Europe's largest investment bank, is poised to trim additional businesses at its securities unit to boost returns after scaling back in credit derivatives.

"We're finding areas that don't make market or economic sense and redeploying resources to areas and clients which need us most," said Colin Fan, co-head of the investment bank. The firm did not plan "blanket cuts" across the securities unit, he said.

Co-chief executive Anshu Jain has said Deutsche Bank is Europe's last global investment bank as competitors retreat. Its reliance on debt trading has not been rewarded by investors this year as revenue declined and capital requirements increased. The company would review and update its strategy next year, a spokeswoman said.

Deutsche Bank shares have dropped 24 per cent this year, more than all but seven lenders in the Stoxx Europe 600 Banks Index, which has slipped 3.2 per cent.

"The bar is simply higher than Deutsche Bank anticipated and so they're having to cut back on selected desks," said Erin Davis, an analyst at Morningstar. "I don't see any reason the trading environment is going to come back in a sustained way in the near term."

The nine largest investment banks generated US$57.1 billion from trading fixed income, currencies and commodities in the first nine months of this year, down 3.8 per cent from a year earlier. Deutsche Bank won market share from its competitors after putting more capital to work at its securities unit.