Large European bank announces ‘radical transformation’

Here is the list of the main points of a new strategy

Large European bank announces ‘radical transformation’. Source: shutterstock.com

Deutsche Bank says it is radically transforming its business model to become more profitable, improve shareholder returns and drive long-term growth. To execute its transformation, the bank will significantly downsize its investment bank and aims to cut total costs by a quarter by 2022.

The highlights of the new strategy are:

  • Creating a fourth business division called the Corporate Bank which will be comprised of the Global Transaction Bank and the German commercial banking business.
  • Exiting the Equities Sales & Trading business and reducing the amount of capital used by the Fixed-Income Sales & Trading business, in particular Rates.
  • Returning 5 billion euros of capital to shareholders starting in 2022, facilitated by a new Capital Release Unit (CRU) to which the bank plans initially to transfer approximately 288 billion euros, or about 20% of Deutsche Bank’s leverage exposure, and 74 billion euros of risk-weighted assets (RWA) for wind-down or disposal.
  • Funding the transformation through existing resources including maintaining a minimum Common Equity Tier 1 ratio of 12.5%. The bank expects to execute its restructuring without the need to raise additional capital.
  • As a result, the bank’s leverage ratio is expected increase to 4.5% in 2020 and approximately 5% from 2022.
  • Reducing adjusted costs by 2022 by approximately 6 billion euros to 17 billion euros, a reduction by a quarter of the current cost base.
  • Targeting a Return on Tangible Equity of 8% by 2022.
  • Investing 13 billion euros in technology by 2022, to drive efficiency and further improve products and services.

SEE ALSO: 10 leading banks in Europe

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