Deutsche on the verge of reducing by a third the bank of investment

Deutsche Bank is on the verge of reducing its distressed investment bank by one-third, while it has failed for twenty years trying to penetrate the highest ranks of Wall Street and to launch in one of the most radical strategic reforms since the financial crisis.

The largest lender in Germany is expected to announce on Sunday the creation of a new bank of poor quality significantly larger than expected, to get out of the vicious circle of declining revenues, high financing costs and the low price of the action.

CEO, Christian Sewing, has booked between 75 and 80 billion euros of risk-weighted badets via a vehicle called the capital release unit, told the Financial Times a senior executive with a direct knowledge of the issue.

The majority of the badets will come from Deutsche's deficit investment bank, whose balance sheet currently stands at 228.5 billion euros. In the upper part of the range, the division's balance sheet would decrease by 35%.

People informed of these projects have previously told the Financial Times that leaders were discussing the possibility of transferring about 50 billion euros of RWA into a bad bank. Bloomberg first reported the highest figures.

The details of the restructuring, which should result in up to 20,000 job cuts, should be released Sunday afternoon after the Supervisory Board meeting.

Deutsche has already lost two top executives because of the restructuring: the head of the investment bank Garth Ritchie and the head of the retail bank Frank Strauss.

The departure of Sylvie Matherat, responsible for regulation, should be announced Sunday, told FT people familiar with internal discussions at the bank.

The supervisory board should appoint at least one new director to the board of directors.

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, told two people

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

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.