Deutsche Bank CEO reverses course with overhaul to raise capital
Deutsche Bank AG Chief Executive Officer John Cryan is reversing course less than two years into his new strategy, announcing an overhaul that includes offering ^8 billion ($8.5 billion) in stock, selling part of the asset management business and reintegrating Postbank.
“It’s a positive step forward that we take the brave step of admitting we were going in the wrong direction,” Cryan said on Sunday. The CEO named two deputies to help him implement the shift, which he said he intends to see through to fruition. “I don’t intend to go anywhere.”
Germany’s largest lender will keep the Postbank consumer division and still aim to reduce total costs to ^22 billion by 2018, the Frankfurt-based company said. Chief Financial Officer Marcus Schenck, 51, and Christian Sewing, who oversees wealth management and consumer banking, will become co-deputy CEOs. The company will find a new CFO “in due course.”
Cryan, 56, had unsuccessfully sought to sell Postbank to avoid tapping shareholders for extra cash. Deutsche Bank has posted more than ^8 billion euros of net losses in the past two years as Cryan, who took over in 2015, settled misconduct investigations and scaled back capital-intensive debt-trading businesses.
“A strong capital base is essential if we’re to succeed in charting this strategy,” Cryan wrote in a letter to employees. The share sale will “remove a major source of uncertainty. That should make us significantly more attractive for our clients.”
The lender said it will sell a minority stake in its asset management unit through an initial public offering in the next two years. That, along with asset disposals at the investment bank, will help raise another 2 billion euros of capital. The bank will propose a dividend in May of 0.19 euros per share.
Jeff Urwin, who led the investment banking division, will retire from the management board after a transition period, the bank said. Cryan will take direct oversight for the US operations, and the firm is recombining its investment banking and trading units after announcing a split of the two in 2015.