Deutsche Bank to slash jobs in retreat from Wall Street

Deutsche Bank

Deutsche Bank aims to slash its portfolios in the United States and Asia in a shift of focus to clients "whose activities are closely aligned with the strengths of the German and European economies". "There is no time to lose as the current returns for our shareholders are unacceptable".

Among 2 analysts covering Deutsche Bank AG Common Stock (NYSE:DB), 0 have Buy rating, 1 Sell and 1 Hold.

Deutsche Bank's (DBKGn.DE) new chief executive Christian Sewing took firm action on its long-troubled investment bank on Thursday, cutting back bond and equities trading after a dramatic drop in quarterly profit.

Deutsche Bank said that the investment banking business would be aimed at its core European client base and on underwriting and financing areas in which it has a strong competitive position against other banks.

For the first quarter of this year, it reported a drop in revenues of 5% to €7bn (£6.1bn), while its corporate and investment bank reported a 13% drop in revenues to €3.8bn.

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

It will kick off a review of its global equities business with a view to "reducing its platform", including pulling back leverage exposure to global prime finance.

"We believe it is the right strategy especially taking into account the poor results", Kian Abouhossein, an analyst at JPMorgan Chase & Co., said in a note to clients. This will entail a drastic downsizing of interest rate trading in the USA and corporate banking in America and Asia, the bank noted in a statement.

Paul Achleitner, now Deutsche Bank's supervisory board chairman, advised it on the purchase while at Goldman Sachs Group Inc. Deutsche Bank presently has a consensus rating of Hold and an average price target of $17.41. HSBC downgraded Deutsche Bank from a "buy" rating to a "hold" rating in a report on Monday, January 8th. With the review still ongoing, Achleitner was secretly seeking replacements for Cryan while the CEO fought to keep his job.

Mr Sewing, who has been with the bank for his entire career, was previously responsible for its private and commercial bank operations. Finally, Bank of America raised Deutsche Bank from an "underperform" rating to a "neutral" rating in a report on Monday, February 19th. It increased its estimate for restructuring expenses to 800 million euros this year, up from an earlier estimate of 500 million euros, Chief Financial Officer James von Moltke said.

"Delivery is key from here", said Guy de Blonay, a fund manager at Jupiter Asset Management.

"Commitment to sectors in the US and Asia, in which cross-border activity is limited, will be reduced", it added.

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