Deutsche Bank's new CEO Christian Sewing
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 biggest bank said net profit fell by 79% to €120 million ($146 million) in the first quarter of the year.
Underscoring the issues at the investment bank, trading revenue in the first quarter dropped 17 percent from a year earlier, compared with a 12 percent increase at USA rivals. "Also, the newly appointed chief executive officer remains confident of staging a turnaround fast through improvement in all the business segments". This was mainly caused by currency rate fluctuations, Euro's strength against the U.S. Dollar and low revenues from corporate and investment banking. Sewing also said that while they were in a good position regarding corporate and investment banking, they were not strong enough in other areas and needed to readjust their strategy and act in a decisive manner. "There is no time to lose as the current returns for our shareholders are not acceptable", he said in a statement.
Binance surpassed Germany's largest and one of Europe's biggest banks in profitability. Revenue in its private and commercial bank unit was 2.63 billion euros, down 2 percent. Deutsche Bank had a negative return on equity of 1.28% and a negative net margin of 2.34%.
The company didn't provide numbers showing how deep the cuts to the investment bank will be.
The new CEO appointed at Deutsche Bank, Christian Sewing note that the bank will shift from hedge fund investment and concentrate on steadying few strong areas of the bank. His plans then, which included thousands of job cuts, came after his predecessor Anshu Jain's attempts to turn the bank's fortunes around. "The focus right now is on execution, making sure we move quickly to adjust the businesses to that core perimeter".
Yet the aggressive expansion eventually led to a spate of legal scandals that took Cryan a good part of his three-year tenure to clean up. 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.
In a quarterly-earnings statement Thursday, Deutsche said it would scale back certain areas of its struggling global investment banking business as part of a firm-wide restructuring meant to reverse declining profits. The bulk of the cuts will focus on the U.S. and Asia.
Today's announcements may determine the bank's credit rating, which influences its financing costs.
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