Deutsche Bank gears up to regain lost shine

FRANKFURT: As it emerged from years dogged by scandal, Germany’s biggest lender Deutsche Bank aimed to up profitability and reclaim a place on the global stage to rival giant American competitors.

But the bank warned profits would never again reach the riskfuelled heights of the pre-financial crisis era as it grinds through a deep restructuring, adjusts to new rules and adds thousands of jobs in regulatory compliance.

Deutsche “absolutely does not want to take unconsidered risks as it did in the past” as it girds itself to re-conquer what it could of the lost ground, said compliance chief Sylvie Matherat.

Its newfound strictness about financial regulation meant the bank was “on track” to restore confidence among clients, she said.

Already, this autumn is far calmer for the group than last year’s. Back then, the United States Department of Justice slapped it with a US$14.2 billion (RM60.21 billion) fine demand over its role in the subprime mortgage crisis, the trigger for the 2008-09 financial crisis.

Clients rushed to withdraw their cash from Deutsche’s investment banking and wealth management arms, fearing it might finally go bust.

It could have been the last straw for the lender, which had pumped itself up into a global giant hoping to take on American mega-banks on equal footing since the 1990s.

In the end, Deutsche survived after bosses negotiated a cheaper — but still painful — deal to pay US$7.2 billion in the US.

Unlike US competitors, Deutsche was slow to react to the financial crisis, and “should have begun cleaning up its balance sheet earlier”, said former Bank of France regulation chief Matherat, who joined Deutsche in 2014.

British chief executive John Cryan has chosen a path of reducing risks in its investment banking division, closing 200 branches in Germany and slashing some 9,000 jobs worldwide.

Even once those mammoth tasks are ticked off, “returning to pre-crisis levels of profitability isn’t possible”, warns Matherat.

The lender ought to aim for the same ball park as its biggest rivals, which “have set objectives of around 10 per cent net return on equity”, Matherat judged. AFP

Unlike US competitors, Deutsche was slow to react to the financial crisis, and “should have begun cleaning up its balance sheet earlier. SYLVIE MATHERAT Deutsche Bank compliance chief