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.
Today we have announced the most fundamental transformation of Deutsche Bank in decades"
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.