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The largest bank in Germany is expected to announce a radical overhaul, including a potential 20,000 job cuts to resolve some of the institution's long-term problems, informed sources said in a high-level segment of the Wall Street Journal. Changes at Deutsche Bank, which also include key management positions, occur when its shares have reached their lowest level.
The bank has repeatedly tried to reorganize its activities, including an attempt to merge with its competitor Commerzbank. Discussions failed in April. Deutsche Bank pointed out that additional costs and risks badociated with a merger were key issues.
Several senior members of the bank are also expected to leave. Investment bank chief Garth Ritchie resigned on Friday, while Frank Strauss is expected to step down as head of retail banking when he disagreed with the bank's restructuring strategy.
The commitment to change was confirmed by President and CEO Christian Sewing, who joined the organization a little over a year ago. At the bank's annual general meeting in May, Sewig told shareholders: "We will accelerate the transformation by focusing our bank rigorously on profitable and growing businesses that are particularly useful for our clients. That's my promise and you can be sure of it. "
The job cuts in the organization can reach 20,000, trading and research, as well as derivatives trading, should be the hardest hit.
"I can badure you that we are ready to make severe cuts," added Sewing.
Despite badurances from senior management, Deutsche Bank shares hit record lows last month at $ 6.61.
The bank received another blow Friday due to the downgrading of Fitch Ratings rating to "BBB", two levels higher than junk status. The agency indicated that positive rating measures could be taken if the bank stabilized its business model and generated acceptable returns through changes in corporate and investment banking, accelerated commercial integration of private banks, and and cost discipline.
"However, we think that a new restructuring would be difficult to implement," said the agency in a statement. "If we fail to come up with a combination of activities that offer more adequate returns and a stronger capacity to generate capital internally, this could lead to further downgrade of ratings."
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Last updated: Sunday, July 7, 2019 KSA 12h37 – GMT 09h37
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