Deutsche Bank to drop lo­ca­tions, and stream­line global op­er­a­tions

The China Post - - WORLD BUSINESS - BY DAVID MCHUGH

Deutsche Bank says its re­or­ga­ni­za­tion will mean spin­ning off its Post­bank branches in Ger­many through a share of­fer­ing, closing of­fices in some coun­tries, and elim­i­nat­ing less prof­itable busi­ness at its in­vest­ment bank­ing di­vi­sion

Bank co-CEOs Juer­gen Fitschen and An­shu Jain made the an­nounce­ments Mon­day as they pro­vided more de­tail about the bank’s re­or­ga­ni­za­tion an­nounced Fri­day.

Deutsche Bank has strug­gled to main­tain the prof­its in­vestors want to see while meet­ing reg­u­la­tory de­mands to re­duce risk, set­ting aside bil­lions to set­tle al­le­ga­tions of past mis­con­duct, and re­duc­ing over­head costs.

The bank said the mea­sures it was an­nounc­ing would make it more cost-ef­fi­cient and sim­plify its op­er­at­ing struc­ture, sav­ing 3.5 bil­lion eu­ros (US$3.8 bil­lion) a year by 2020, against one-time costs of 3.7 bil­lion eu­ros to im­ple­ment the changes.

They said the bank ex­pects to hold an ini­tial public of­fer­ing for shares in Post­bank and to see the di­vi­sion re­moved from its earn­ings state­ments by the end of next year. Post­bank of­fers branch bank­ing to re­tail cus­tomers in post of­fices around Ger­many.

The bank also said in a state­ment Mon­day that it in­tends to stream­line the bank to re­duce costs and im­prove fi­nan­cial con­trols. It said it would drop busi­ness lo­ca­tions in some coun­tries to fo­cus on coun­tries and cities where it is strong­est.

It plans to re­duce lever­age, or the use of bor­rowed money, at its in­vest­ment bank­ing di­vi­sion by 200 bil­lion eu­ros. Lever­age en­hances prof­its but in­creases risks of loss as well. And it said it would shift fi­nan­cial re­soure­ces away from less prof­itable lines of busi­ness there.

Mon­day’s state­ment fills in de­tails af­ter a brief an­nouce­ment Fri­day, and fol­lows Sun­day’s an­nounce­ment that the bank saw first-quar­ter net profit fall by half from the same quar­ter a year ago, to 559 mil­lion eu­ros. Earn­ings fell de­spite stronger rev­enues from trad­ing on mar­kets be­cause Deutsche Bank had to set aside an ad­di­tional 1.5 bil­lion eu­ros for penal­ties paid to U.S. and UK au­thor­i­ties. Deutsche Bank made the pay­ments to set­tle al­le­ga­tions bank traders rigged im­por­tant mar­ket in­ter­est-rate bench­marks.

Deutsche Bank shares fell 3.3 per­cent in morn­ing trad­ing Mon­day in Europe to 30.15 eu­ros.

AP

Co-CEOs of Deutsche Bank An­shu Jain, right, and Juer­gen Fitschen ar­rive for a press con­fer­ence about fu­ture strate­gies of the bank in Frank­furt, Ger­many on Mon­day, April 27.

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