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Reuters/Kai Pfaffenbach
Dark days.
18,000 JOBS

Deutsche Bank’s latest restructuring is its most “radical” yet

By Jason Karaian

Deutsche Bank is dramatically shrinking its investment bank and retreating from operations around the world. CEO Christian Sewing described it as “faster and more radical” than previous turnaround efforts, and “nothing less than a fundamental rebuilding of Deutsche Bank.”

The bank is quitting equity sales and trading entirely, and sharply reducing the amount of capital it devotes to its bond trading business. By 2022, it will cut some 18,000 jobs, or around one in five of the workers it employs today. It will shift €74 billion ($83 billion) in risk-weighted assets into a so-called “bad bank” to run off.

In total, Deutsche Bank aims to cut costs by €6 billion by 2022, or a quarter of its current cost base. The impact of the restructuring will result in a hit of €5 billion to the bank’s earnings this year, possibly setting it up for yet another loss-making year. Dividends will be suspended in 2019 and 2020.

In the end, Deutsche Bank will focus on its operations serving businesses and clients of the private bank and asset management units. After years of false dawns in its attempt to compete globally with the big American investment banks, Deutsche Bank is definitively retrenching from the racier aspects of investment banking into safer, more stable businesses focused on Germany and elsewhere in Europe.

Haven’t we been here before? As Quartz has chronicled, successive Deutsche Bank bosses have promised a reversal of fortune on several occasions, as part of a series of turnaround plans that never seem to bear fruit. (For example, Deutsche Bank put €125 billion into a bad bank in 2012.) In the meantime, the bank’s shares have fallen by 90% from their all-time high in 2007.

Today’s restructuring plan is the most aggressive yet. Will it work?

Deutsche Bank’s interminable turnaround

“Today we have announced the most fundamental transformation of Deutsche Bank in decades. We are tackling what is necessary to unleash our true potential: our business model, costs, capital and the management team. We are building on our strengths. This is a restart for Deutsche Bank – for the long-term benefit of our clients, employees, investors and society.”

Christian Sewing, July 8, 2019

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“Our Deutsche Bank needs a clear focus – it needs to be a bank that is completely focused on the needs of clients and at the same time whose performance is less volatile. This requires further changes – indeed, far-reaching changes. Now, we must follow the stabilisation phase with a phase of transformation.”

Christian Sewing, May 23, 2019

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“Our return to profitability shows that Deutsche Bank is on the right track. Now, our priority is to take the next step. In 2019 we aim not only to save costs but also to make focused investments in growth. We aim to grow profitability substantially through the current year and beyond.”

Christian Sewing, Feb. 1, 2019

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“We are very confident that we will meet our 2018 targets. On the other hand we have not yet achieved a turnaround in terms of revenues.”

Christian Sewing, Oct. 24, 2018

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“We all agree that we should get this transformation done as quickly as possible. In most areas we are as determined as necessary. But I also notice that, in respect of restructuring pace and costs, we’re still not universally acting as we want to.”

Christian Sewing, July 25, 2018

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“We have to act decisively and to adjust our strategy. There is no time to lose as the current returns for our shareholders are not acceptable.”

Christian Sewing, April 26, 2018

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“Are we heading in the right direction? Yes.
Are we gaining momentum? Yes.
Are we regaining once lost trust? Yes.
Are we satisfied with our current results? Absolutely not!”

John Cryan, Feb. 2, 2018

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“While the revenue environment remained challenging, we have made significant progress on our key initiatives … We are convinced that the benefits of our efforts will step by step become more apparent in the coming quarters and years.”

John Cryan, Oct. 26, 2017

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“Despite the significant improvement, this level of profitability falls short of our longer term aspirations.”

John Cryan, July 27, 2017

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“Let’s try not to go through some of the low points of 2016 again. One such experience in a lifetime is more than enough.”

John Cryan, April 27, 2017

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“Let’s restore Deutsche Bank, this institution so rich in tradition, to its former strength. We want to be a bank that contributes to economic growth and to the good of the community. A bank that can generate a positive impact – for its clients, employees, investors and society.”

John Cryan, Feb. 2, 2017

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“In spite of these achievements, I do not want to paint a flattering picture. We have a lot of work ahead of us.”

John Cryan, Oct. 27, 2016

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“If this weak economic environment persists, we will need to be still more ambitious in our restructuring. We will do everything in our power to accelerate the measures we have already planned.”

John Cryan, July 27, 2016

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“We continue to make important progress in transforming the bank.”

John Cryan and Jürgen Fitschen, April 28, 2016

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“We are focused on 2016 and continue to work hard to clear up our legacy issues. Restructuring work and investment in our platform will continue throughout the year.”

John Cryan, Jan. 28, 2016

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“Today we announced to the market some new important financial information. The news is not good, and I expect a number of you will be very disappointed by it.”

John Cryan, Oct. 7, 2015

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“Solid revenue growth underscores the fundamental strengths of our businesses and the commitment of our people. However, our challenges are also evident in the unacceptably high level of our costs, our continuing burden of heavy litigation charges, a balance sheet that must be more efficient, and the poor overall returns to our shareholders.”

John Cryan, July 30, 2015