Published: Fri, April 27, 2018
Markets | By Erika Turner

Deutsche Bank to scale back investment bank as profits slump

Deutsche Bank to scale back investment bank as profits slump

Deutsche Bank AG is commencing on what might be its struggling investment bank's most-sweeping overhaul ever and said that it would target more on the European clients, walking away from ambitions to be a global top security firm.

Germany's largest bank Deutsche Bank posted a sharp decline, noting that its net income in the first quarter fell by 120 million euros ($146 million), a 79 percent decline compared to the past year.

Investment banking now accounts for 54 per cent of Deutsche Bank's revenues, which fell across all divisions in the first quarter of the year, underlining the enormity of the challenge.

Deutsche Bank said today that it plans to focus its consumer bank on growing markets like Italy and Spain while in wealth management, the bank will look to grow in Germany and in worldwide markets, Deutsche Bank said. Revenue in its private and commercial bank unit was 2.63 billion euros, down 2 percent. "It's one of the most profitable quarters we've had in corporate and investment banking".

The bank also aims to scale back operations in bond sales and equities trading, particularly in the United States and Asia, where it was once bullish.

But Cryan's lack of progress was a sticking point with Deutsche's management board, and Sewing reiterated that the bank would now step up the pace of change.

Mr Sewing said the first quarter results showed the need for "immediate action", adding that shareholder returns were "not acceptable".

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Deutsche Bank fell as much as 4.2 percent before paring losses and trading 0.5 percent lower at 1:11 Frankfurt.

The company did not provide numbers depicting as to how deep the cuts to the investment bank would be.

The bank also stated that additional cost cutting measures will be implemented, including job cuts but no specifications were given.

Deutsche has been conducting a global review of its investment bank to determine the way forward as revenues shrink. "That means rescaling a little bit in the USA and acknowledging that we can't compete against our USA brethren in terms of scale in every business, product, market, client segment". The U.S. counts about 10,300 employees, or about a tenth of the firm's global workforce. Deutsche Bank Aktiengesellschaft (NYSE:DB) has declined 18.76% since April 25, 2017 and is downtrending.

The figure was also below the 575 million euros posted in the first quarter of previous year.

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