Deutsche Bank Retail Bank Renounces Restructuring

Head of Deutsche Bank's retail bank, Frank Strauss, will leave Germany's largest lender because he disapproves of the radical change in strategy announced by CEO Christian Sewing to three informed people. by this case.

The 49-year-old executive is the second-worst victim of an impending upheaval that will result in 20,000 job cuts and the disposal of risk-weighted assets of more than 50 billion euros.

Deutsche Bank announced Friday the departure of its main banker, Garth Ritchie.

The chief of regulation, Sylvie Matherat, will also lose his job, told FT people familiar with internal discussions at the bank.

The bank will announce the changes of management and the new strategy as of Sunday afternoon after a meeting of the supervisory board.

A person close to the supervisory board said that the deputy general manager of the bank, Karl von Rohr, was considered the likely successor of Strauss, whose contract is in effect until next summer. .

A second person suggested that Mr. von Rohr assume the role of Mr. Strauss on the board, while operational responsibility for the retail business could be delegated to a non-board member. Sewing wants to significantly reduce the number of members of the nine-member board of directors.

The departure of Mr. Strauss has not yet been officially decided, but people familiar with the discussions said it was extremely unlikely that Mr. Strauss or Mr. Sewing would change their minds before the meeting of the Supervisory Board. Sunday.

Deutsche Bank and Mr Strauss declined to comment. Bloomberg first reported that Strauss was likely to leave.

Deutsche Private and Commercial Banking serves retail clients as well as small and medium-sized businesses in Germany.

Sewing plans to transfer business lending operations to a new corporate bank that will also house Deutsche's global transaction bank.

This unit will be headed by 39-year-old Stefan Hoops, who currently heads the global transaction bank, two informed people said. The division is supposed to combine all the services that a treasurer of a company needs, from credit to hedging, through the financing of transactions, payments, liquidity and cash management.

The lender's financing activities will be grouped into a division that will focus on the needs of general managers and CFOs. It will probably be headed by Mark Fedorcik, a London-based investment banker.

Neither Mr. Hoops nor Mr. Fedorcik will sit on the Board. They will report directly to Mr. Sewing, who will assume Mr. Ritchie's responsibilities.

Deutsche's remaining trading operations – bonds and currencies, European equities and a much lower interest rate trading activity – will form a new, smaller capital markets unit focused on institutional clients. We still do not know who will lead this unit.

The remaining retail units will undergo additional structural changes, including a centralization of computer functions that Strauss refuses, said a person familiar with the details.

Mr. Strauss joined Deutsche Bank in 1989 as an apprentice in the city of Iserlohn, Westphalia, and spent his entire career at the lender. He became the managing director of Postbank, the retail bank that Deutsche acquired from the German postal service in 2011.

Since 2017, he has been responsible for Postbank's integration into Deutsche Bank's retail operations – a complex operation that Deutsche Bank executives consider to be the largest bank merger supervised by the ECB.

Integration is a flagship project of Deutsche Bank, which attempts to reduce its exposure to financial market volatility. Deutsche hopes the retail merger will reduce annual costs by 900 million euros by 2022.

In 2018, private and commercial banking accounted for 41% of revenues and 60% of pre-tax profits. Half of the 91,500 employees of Deutsche Bank work in this unit. Since the end of 2017, the lender has cut around 2,000 jobs each year.

The division generated a return on tangible capital of 4.8% in 2018 and targets more than 12% by 2021. "We are absolutely committed to [this] Mr Strauss told the FT in May.

He then said that the integration of Postbank was ahead and that some milestones planned for 2020 would be implemented in 2019.

The lender plans to release up to 300 million euros in annual cost synergies this year, compared with the previous target of 200 million euros. "2019 will be the first year in which annual cost synergies will exceed restructuring costs," he said in May.