Deutsche Bank’s ‘fundamental transformation’ under CEO Christian Sewing to cost US$8.3 billion and 18,000 jobs
- Bank to shelve dividend this year and next to pay for the restructuring that will shrink its investment bank, global footprint and fixed-income business
- Investors cheer, sending the bank’s shares 4.4 per cent higher in early trading
Deutsche Bank unveiled a radical overhaul that will see the lender exit its equities business, post a €2.8 billion (US$3.1 billion) second-quarter loss and cut the workforce by 18,000 to reverse a slide in profitability.
Chief executive Christian Sewing will shelve the dividend this year and next and take restructuring charges of €7.4 billion through 2022 to pay for an overhaul that shrinks the German lender’s once-mighty investment bank along with its global footprint and key fixed-income business.
“Today we have announced the most fundamental transformation of Deutsche Bank in decades,” Sewing said in a statement on Sunday. “We are tackling what is necessary to unleash our true potential.”
The scale of the revamp underscores the failure of Sewing and his recent predecessors to solve the fundamental problem: costs were too high and revenue too low. After government-brokered merger talks with Commerzbank collapsed in April, the CEO had few alternatives to bolster market confidence. His plan was approved by the board at a meeting on Sunday.
Deutsche Bank climbed as much as 4.4 per cent in Frankfurt trading and was up 3.7 per cent at €7.44 in early trading, making it the best performer on the STOXX Europe 600 banking index and the second best on the broader STOXX 600 index.