Deutsche Bank to slash investment arm in overhaul

FRANKFURT — Deutsche Bank said Sunday it would slash thousands of jobs and sell a large part of its investment banking operations in a major overhaul that might be the troubled German lender’s last chance to reverse a decade of decline.

The reorganization and cost-cutting plan focuses on Deutsche Bank units involved in selling stocks and bonds, which are concentrated in New York and London. The bank said it would exit its equities sales and trading business while cutting the size of a division that deals with securities that pay a fixed interest rate.

Deutsche said its overhaul would result in the loss of about 18,000 jobs.

The overhaul announced Sunday also calls for more than $300 billion in highrisk assets to be sequestered in a separate unit, where they will be sold off or retired. That is an attempt to address perceptions that Deutsche Bank is burdened by toxic assets.

Deutsche Bank also said it expected to report a loss for the second quarter of $3.1 billion after subtracting the costs involved in carrying out the plan.

The question in the months ahead will be whether the turnaround effort by Christian Sewing, Deutsche Bank’s 49-year-old chief executive, comes too late. Other European banks like UBS of Switzerland and Barclays in Britain pared back their ambitions after the 2008 financial crisis, but Deutsche Bank clung to investment banking even as the unit generated multiple scandals and billions of euros in losses.

Until Sewing, an expert in risk management, took over last year, Deutsche Bank was led by investment bankers reluctant to make drastic changes. They continued to collect handsome paychecks as the bank’s share price plummeted. The plan outlined Sunday is an attempt to break decisively with the past, but many analysts and investors question whether it will be enough.

Deutsche Bank’s appetite for risk was perhaps epitomized by its relationship with Donald Trump. Deutsche Bank continued to lend to the Trump Organization long after other lenders concluded that the risk was too great. In the last year, Deutsche Bank has also been battered by accusations of lax money-laundering controls and has been under intense scrutiny by regulators in the United States and Europe.