Deutsche Bank has announced radical transformation plan of its business model by downsizing its investment bank and aiming to cut total costs by a quarter by 2022.
The restructuring actions will include a workforce reduction of approximately 18,000 full-time equivalent employees to around 74,000 employees by 2022. The bank expects to reduce adjusted costs by approximately €6bn to €17bn in 2022. With this transformation plan, the German bank aims to reduce its cost-income ratio to 70% in 2022.
"Today we have announced the most fundamental transformation of Deutsche Bank in decades," chief executive Christian Sewing said.
It has created a fourth business division 'Corporate Bank' which will be comprised of the Global Transaction Bank and the German commercial banking business.
It's investment bank will focus on its traditional strengths in financing, advisory, fixed income and currencies.
Deutsche Bank will exit its Equities Sales & Trading business, while retaining a focused equity capital markets operation. In this context, Deutsche Bank has entered into a preliminary agreement with BNP Paribas to provide continuity of service to its prime finance and electronic equities clients, with a view to transferring technology and staff to BNP Paribas in due course. This agreement remains subject to various conditions and approvals.
In addition, the bank plans to resize its Fixed Income operations in particular its Rates business and will accelerate the wind-down of its existing non-strategic portfolio. In aggregate, Deutsche Bank will reduce risk-weighted assets currently allocated to these businesses by approximately 40%.
DWS remains a pillar of Deutsche Bank's strategy and will continue to pursue its objective of becoming one of the top-10 asset managers globally. DWS expects to grow its RoTE even further from 18% in 2018 to over 20% in 2022.
New leadership team
As part of bank's radical transformation, the Supervisory Board of Deutsche Bank has changed the leadership structure of the bank starting 1 August 2019.
It will give its leaders more flexibility, accelerate decision-making processes and encourage entrepreneurship within the bank.
From 1 August, Deutsche Bank will be managed by a governance structure that should ensure the greatest possible connectivity among the team and with the other management levels of the bank.
The Management Board will comprise central and regional functions. It will be responsible for the strategy of the bank. Christiana Riley, Bernd Leukert and Stefan Simon have been appointed new board members.
A new Group Management Committee (GMC) will include the Management Board members as well as the heads of the operative business divisions. The GMC will connect the Management Board better with the heads of the businesses. The GMC should accelerate decision-making and increase the entrepreneurial spirit in the businesses.
Christiana Riley will take over responsibility for the Americas with immediate effect. Her appointment as member of the Management Board underlines the relevance of our footprint in the US market for Deutsche Bank and its clients. Riley joined the bank in Frankfurt in 2006 after working in investment banking and at McKinsey. Her roles at the bank have included working in the former strategy department (AfK). Since April 2015 she has been chief financial officer for the Corporate & Investment Bank (CIB). She will report to Christian Sewing pending regulatory approval for her Management Board membership.
Bernd Leukert will join Deutsche Bank on 1 September 1, 2019, responsible for digitalisation, data and innovation. Leukert has been a member of the Management Board of SAP SE since 2014. He brings 25 years of experience in product development at the leading German software firm. His appointment reflects the strong commitment of Deutsche Bank to significantly improve its IT both to become more efficient and to drive innovation. Pending regulatory clearance, Leukert will report to Frank Kuhnke.
Stefan Simon will become chief administrative officer (CAO) and take on responsibility for regulatory affairs and legal. He has been a member of Deutsche Bank's Supervisory Board since August 2016 and has been chairman of its Integrity Committee. Simon is a lawyer and tax consultant and a former partner at Flick Gocke Schaumburg. With his appointment, Deutsche Bank is reaffirming its commitment to good corporate governance and a trusted relationship with the regulatory authorities. Until regulatory clearance, Simon will report to Karl von Rohr.
Chief executive officer Christian Sewing takes on responsibility for the Corporate Bank and the Investment Bank.
President Karl von Rohr will take on responsibility for the Private Bank and Asset Management (DWS). Additionally, he will retain regional responsibility for Germany and continues to be responsible for Human Resources.
Chief operating officer Frank Kuhnke will gain responsibility for the Capital Release Unit and for the Europe, Middle East and Africa (EMEA) region.
Chief risk officer Stuart Lewis will assume additional responsibility for Compliance and the Anti-Financial Crime Unit. He will also gain responsibility for the UK and Ireland.
James von Moltke will continue in his role as chief financial officer. Werner Steinmüller remains CEO of the Asia-Pacific region.
Along with Garth Ritchie who will advise the bank until end of November, Management Board members Sylvie Matherat and Frank Strauß will leave the bank as of 31 July 2019.
Garth Ritchie joined Deutsche Bank in 1996 as an associate in the bank's Johannesburg office, and went on to hold senior management positions across the investment bank. He became a member of the Global Markets Executive Committee in 2009 as head of Equities and held a range of leadership positions across the division. In January 2016, he was appointed to the Management Board with responsibility for the bank's Markets division. In 2017 he became co-head of the newly created Corporate & Investment Bank (CIB). One year later he became its sole head and was appointed as president.
Sylvie Matherat has been chief regulatory officer since 2015, responsible for relations with regulators. She joined from Banque de France in 2014. During her time at Deutsche Bank, she has significantly increased the scope and the quality of compliance and anti-financial crime controls.
Frank Strauß has been a member of the Management Board since 2017, responsible for the Private & Commercial Bank (PCB). He has shaped the Private and Business Clients business of Deutsche Bank for nearly three decades, and pushed forward digitalization and growth into new markets. During the course of his career he held a number of management positions at Deutsche Bank, including coordinating the European operations of the bank's Private & Business Clients division. He was also responsible for developing the bank's Asian operations in Mumbai and Beijing. Having headed Private & Business Clients Germany since 2006, he joined the Management Board of Postbank in 2011 and became Chairman one year later.
The new Group Management Committee
The new Group Management Committee (GMC) is designed to more closely link the Management Board to the divisions. It comprises Management Board members as well as leaders of the business divisions.
Within the GMC, Stefan Hoops will oversee the new Corporate Bank. Hoops has been at Deutsche Bank since 2003 and head of the Global Transaction Bank (GTB) and head of CIB Germany since October 2018. Before this he worked for the bank in New York. He will report to Christian Sewing.
Mark Fedorcik will be head of the Investment Bank. Fedorcik joined Deutsche Bank through Bankers Trust in 1995 and has had many investment banking leadership roles during his career at Deutsche Bank, including as head of GTB in the US.
Ram Nayak will lead fixed income and currency sales and trading in the Investment Bank. He joined Deutsche Bank in 2009 after working for Citibank, Merrill Lynch and Credit Suisse. His roles have included chairing CIB's Capital and Risk Committee and serving as head of its fixed income trading business.
Fedorcik and Nayak will report to Christian Sewing.
Manfred Knof will join Deutsche Bank on August 1, 2019, as the head of Private Banking Germany. Knof had a long career at the financial institution Allianz, including as CEO of Allianz in Germany from 2015 to 2017. He will report to President Karl von Rohr.
Ashok Aram has been head of PCB International since October 2018 and CEO of EMEA since November 2015. Apart from a one-year break, Aram has worked for Deutsche Bank for over 20 years in a variety of international management roles at Deutsche Bank. He will report to Karl von Rohr, as well as to Frank Kuhnke in respect of his role in EMEA.
Fabrizio Campelli, who joined Deutsche Bank in 2004, has been the Global Head of Wealth Management since 2015. He was previously head of Strategy & Organisational Development as well as deputy chief operating officer for Deutsche Bank Group. He will report to Karl von Rohr.
Louise Kitchen will co-head the Capital Release Unit and represent it on the GMC. She has been at the bank since 2005, most recently as head of Institutional & Treasury Coverage. She will report to Frank Kuhnke.
Ashley Wilson will co-head the Capital Release Unit. He is currently head of Global Trading, Equities. He was previously Head of Global Prime Finance and joined Deutsche Bank in January 2014. Prior to joining Deutsche Bank, he held senior positions at Morgan Stanley, Bank of America Merrill Lynch and Barclays. He will report to Frank Kuhnke.
As chairman of the Management Board of the DWS asset management unit, Asoka Wöhrmann will also be a member of the GMC. In his role as senior group director of Deutsche Bank, he will report to Karl von Rohr.