Deutsche Bank Exiting Equities Sales & Trading07.08.2019
Deutsche Bank 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.
— Deutsche Bank (@DeutscheBank) July 7, 2019
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(1).
- 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(2) 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.
Christian Sewing, Chief Executive Officer of Deutsche Bank, said:
“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.”
“In refocusing the bank around our clients, we are returning to our roots and to what once made us one of the leading banks in the world. We remain committed to our global network and will help companies to grow and provide private and institutional clients with the best solutions and advice for their respective needs – in Germany, Europe and around the globe. We are determined to generate long-term, sustainable returns for shareholders and restore the reputation of Deutsche Bank.”
Paul Achleitner, Chairman of the Supervisory Board of Deutsche Bank, said:
“This fundamental transformation is the right response to the major changes and challenges in the financial industry. Deutsche Bank has been through a difficult period over the past decade, but with this new strategy in place we now have every reason to look forward with confidence and optimism. We have a talented and dedicated team at the helm to relentlessly execute what we promise today and to create a sustainably profitable bank. Our shareholders have supported our bank’s restructuring for years and that’s why a substantial return of capital over time is an important part of our new strategy.”
— Deutsche Bank (@DeutscheBank) July 7, 2019
Refocusing operating businesses
The transformation includes the creation of a Corporate Bank which will be the main hub for corporate and commercial clients of Deutsche Bank and Postbank. The Global Transaction Bank, which provides an essential service to many national and international corporates, will be at the core of the new division. On an average day the equivalent of around one trillion euros is transferred through Deutsche Bank’s systems. In addition, around one million commercial and corporate clients from the Private & Commercial Bank in Germany will form part of the new Corporate Bank. The RoTE of the Corporate Bank is expected to grow from 9% in 2018 to more than 15% in 2022(1).
Deutsche Bank’s Investment Bank will focus on its traditional strengths in financing, advisory, fixed income and currencies. This is expected to increase activity in areas of particular relevance for corporates, including credit and foreign exchange products. As the bank continues to provide strategic advice to corporate clients including a focused equity capital markets business, it will keep an equity and macro research capacity as well as a targeted equity sales force.
Deutsche Bank will exit its Equities Sales & Trading business, while retaining a focused equity capital markets operation. In this context, Deutsche Bank has entered into a preliminary agreement with BNP Paribas to provide continuity of service to its prime finance and electronic equities clients, with a view to transferring technology and staff to BNP Paribas in due course. This agreement remains subject to various conditions and approvals.
In addition, the bank plans to resize its Fixed Income operations in particular its Rates business and will accelerate the wind-down of its existing non-strategic portfolio. In aggregate, Deutsche Bank will reduce risk-weighted assets currently allocated to these businesses by approximately 40%.
Going forward, the bank plans that almost 75% of Investment Banking revenues will be generated in businesses where Deutsche Bank today enjoys a top-5 market position. The RoTE of the Investment Bank is expected to increase to more than 6% in 2022 (1).
The Private Bank will cover private customers across all segments as well as small business clients. Its objective is to build on its position as market leader in Germany, as a focused bank in Europe and as a highly competitive global wealth manager. To achieve this the bank will accelerate the integration of Deutsche Bank and Postbank in Germany, in total aiming to reduce Private Bank costs by 1.4 billion euros by 2022. Additionally 200 million euros will be delivered in the current year.
While reducing operating costs, a major focus of our investments will be on the digitalisation and the development of platforms. In Wealth Management, Deutsche Bank will invest in new client advisors, especially in the growing markets of Asia. The RoTE in the Private Bank is expected to grow from 5% in 2018 to more than 12% in 2022 (1).
DWS remains a pillar of Deutsche Bank’s strategy and will continue to pursue its objective of becoming one of the top-10 asset managers globally. DWS expects to grow its RoTE even further from 18% in 2018 to over 20% in 2022.
Reshaping Deutsche Bank is expected to drive better and less volatile financial results. Revenues are expected to grow from 22.8 billion euros in the core bank in 2018 to around 25 billion euros in 2022, reflecting realistic growth assumptions (1).
Balance sheet reduction and sustained capital strength
Low-return assets or assets that no longer fit into the new strategy will be moved into a Capital Release Unit (CRU) for wind-down. Based on December 2018 balance sheet positions, approximately 74 billion euros of risk-weighted assets (RWA) will be transferred to the CRU. The bank targets to reduce the CRU’s market and credit risk-related RWA of approximately 38 billion euros to less than 10 billion euros by 2021. The bank will work with regulators to reduce the 36 billion euros of operational risk RWA in the CRU over time(1).
Leverage exposure in the CRU of 288 billion euros, as of December 2018, is planned to be mostly unwound by 2022. Deutsche Bank now targets a fully-loaded leverage ratio of 4.5% in 2020 and of approximately 5% from 2022 (1).
Deutsche Bank’s new minimum Common Equity Tier 1 (CET 1) target ratio of 12.5% takes into account the significant adjustment in the business model towards a more balanced and stable bank as well as improvements in its control environment over the past years. This plan has been discussed in detail with the bank’s home regulator which supports the direction and transformation of Deutsche Bank as well as the targets laid out as part of the multi-year transformation process. Deutsche Bank is committed to working closely with its supervisors around the world, as it has been doing consistently over the last several years.
Freeing up capital for shareholders
In light of the bank’s current capital position and reflecting its confidence in the high quality and low risk nature of the assets, Deutsche Bank will look to fund its transformation within its existing resources. As a consequence, Deutsche Bank does not plan to pay common equity dividends for the financial years 2019 and 2020. The bank expects to have sufficient capacity for payments on additional tier 1 securities throughout the transformation phase.
The announced measures are in the longer term expected to free up capital of 5 billion euros to be returned to shareholders through share buybacks and dividends starting in 2022.
Costs to execute the transformation
To implement the transformation, the bank expects one-off charges including impairments, restructuring costs and severance payments of 7.4 billion euros by 2022. For 2019, the total impact is expected to be approximately 5.1 billion euros, thereof about 3 billion euros in the second quarter.
Including the charges related to the restructuring described above, Deutsche Bank expects to report a second quarter 2019 loss before income taxes of approximately 500 million euros and a net loss of 2.8 billion euros. Excluding these charges, Deutsche Bank expects to report second quarter 2019 income before income taxes of approximately 400 million euros and net profit of 120 million euros. Results reflect revenues of 6.2 billion euros with noninterest expenses of 5.6 billion euros and adjusted costs(2) of EUR 5.35 billion euros.
Deeper cost reduction and improved returns
The restructuring actions will include a workforce reduction of approximately 18,000 full-time equivalent employees to around 74,000 employees by 2022. In aggregate, the bank expects to reduce adjusted costs by approximately 6 billion euros to 17 billion euros in 2022.
With this transformation plan, the bank aims to reduce its cost-income ratio to 70 percent in 2022. It targets a post-tax Return on Tangible Equity of 8 percent at the Group level by 2022.
Efficient infrastructure supporting innovation and improving controls
Deutsche Bank is committed to investing a further 4 billion euros in improving controls by 2022. The bank will combine its Risk, Compliance and Anti-Financial Crime functions to strengthen processes and controls while also increasing efficiency.
To reshape and improve its long-term competitive position, the bank will undertake a restructuring of its infrastructure functions, which include back office systems and processes that support all business divisions. These functions will become leaner, more innovative and more digital.
A separate Technology function will be created which will have responsibility to further optimize Deutsche Bank’s IT infrastructure. It will also drive the digitalisation of all businesses. This is set to boost innovation as well as further strengthen the internal control environment. The bank will make targeted investments in technology and innovation, utilising a budget of 13 billion euros by 2022.
(1) Divisional figures are pro-forma for re-segmentation, preliminary, unaudited and subject to change
(2) Adjusted costs are defined as total noninterest expenses excluding the impairment of goodwill and other intangibles, litigation expenses and restructuring and severance
New leadership team
As part of its radical transformation, the Supervisory Board of Deutsche Bank has changed the leadership structure of the bank starting August 1. It will give its leaders more flexibility, accelerate decision-making processes and encourage entrepreneurship within the bank.
Deutsche Bank announces new leadership teamhttps://t.co/pARmdzE5Os
— Deutsche Bank (@DeutscheBank) July 7, 2019
From August 1, Deutsche Bank will be managed by a governance structure that should ensure the greatest possible connectivity among the team and with the other management levels of the bank:
- The Management Board will comprise central and regional functions. It will be responsible for the strategy of the bank. Christiana Riley, Bernd Leukert and Stefan Simon have been appointed new board members.
- A new Group Management Committee (GMC) will include the Management Board members as well as the heads of the operative business divisions. The GMC will connect the Management Board better with the heads of the businesses. The GMC should accelerate decision-making and increase the entrepreneurial spirit in the businesses.
- Along with Garth Ritchie who will advise the bank until end of November, Management Board members Sylvie Matherat and Frank Strauß will leave the bank as of July 31.
The new composition of the Management Board
The Supervisory Board has appointed three Senior Group Directors who will join the Management Board once clearance from the regulatory authorities has been granted:
Christiana Riley will take over responsibility for the Americas with immediate effect. Her appointment as member of the Management Board underlines the relevance of our footprint in the US market for Deutsche Bank and its clients. Riley, who was born in the US, joined the bank in Frankfurt in 2006 after working in investment banking and at McKinsey. Her roles at the bank have included working in the former strategy department (AfK). Since April 2015 she has been Chief Financial Officer for the Corporate & Investment Bank (CIB). She will report to Christian Sewing pending regulatory approval for her Management Board membership.
Bernd Leukert will join Deutsche Bank on September 1, 2019, responsible for digitalisation, data and innovation. Leukert has been a member of the Management Board of SAP SE since 2014. He brings 25 years of experience in product development at the leading German software firm. His appointment reflects the strong commitment of Deutsche Bank to significantly improve its IT both to become more efficient and to drive innovation. Pending regulatory clearance, Leukert will report to Frank Kuhnke.
Stefan Simon will become Chief Administrative Officer (CAO) and take on responsibility for regulatory affairs and legal. He has been a member of Deutsche Bank’s Supervisory Board since August 2016 and has been Chairman of its Integrity Committee. Simon is a lawyer and tax consultant and a former partner at Flick Gocke Schaumburg. He has taught as an honorary professor at the University of Cologne since 2008 and is a renowned expert in governance, compliance and corporate law. With his appointment, Deutsche Bank is reaffirming its commitment to good corporate governance and a trusted relationship with the regulatory authorities. Until regulatory clearance, Simon will report to Karl von Rohr.
The responsibilities of the current board members will change as follows:
- Chief Executive Officer Christian Sewing takes on responsibility for the Corporate Bank and the Investment Bank.
Christian Sewing will assume responsibility for the Corporate & Investment Bank on the Management Board. pic.twitter.com/YwtnBtnAPx
— Deutsche Bank (@DeutscheBank) July 5, 2019
- President Karl von Rohr will take on responsibility for the Private Bank and Asset Management (DWS). Additionally, he will retain regional responsibility for Germany and continues to be responsible for Human Resources.
- Chief Operating Officer Frank Kuhnke will gain responsibility for the Capital Release Unit and for the Europe, Middle East and Africa (EMEA) region.
- Chief Risk Officer Stuart Lewis will assume additional responsibility for Compliance and the Anti-Financial Crime Unit. He will also gain responsibility for the UK and Ireland.
- James von Moltke will continue in his role as Chief Financial Officer.
- Werner Steinmüller remains CEO of the Asia-Pacific region.
“To meet the anticipated challenges we need a management team that can not only execute against a demanding plan but is also capable of responsibly seizing entrepreneurial opportunities. We are convinced that under the leadership of Christian Sewing this new team will succeed,” said Paul Achleitner, Chairman of the Supervisory Board.
Besides the departure of Garth Ritchie which has already been communicated, two other board members will leave the bank as of July 31.
Sylvie Matherat has been Chief Regulatory Officer since 2015, responsible for relations with regulators. She joined from Banque de France in 2014. During her time at Deutsche Bank, she has significantly increased the scope and the quality of compliance and anti-financial crime controls. “Under Sylvie Matherat’s leadership the bank has significantly invested in technology and personnel and strengthened its control systems. She has not only systematically and technologically advanced the bank in the area of regulation, compliance and anti-financial crime but she has also significantly contributed to Deutsche Bank’s new compliance and risk culture,” said Chairman Paul Achleitner.
Frank Strauß has been a member of the Management Board since 2017, responsible for the Private & Commercial Bank (PCB). He has shaped the Private and Business Clients business of Deutsche Bank for nearly three decades, and pushed forward digitalization and growth into new markets. During the course of his career he held a number of management positions at Deutsche Bank, including coordinating the European operations of the bank’s Private & Business Clients division. He was also responsible for developing the bank’s Asian operations in Mumbai and Beijing. Having headed Private & Business Clients Germany since 2006, he joined the Management Board of Postbank in 2011 and became Chairman one year later. ”For almost 30 years Frank Strauß has shown strong leadership and made an important contribution to successfully developing the Private and Corporate Banking of Deutsche Bank. We regret that he does not support the restructuring as planned. His departure is the logical consequence. We wish him every success in his future career,” said Chairman Paul Achleitner.
The new Group Management Committee
The new Group Management Committee (GMC) is designed to more closely link the Management Board to the divisions. It comprises Management Board members as well as leaders of the business divisions.
Within the GMC, Stefan Hoops will oversee the new Corporate Bank. Hoops has been at Deutsche Bank since 2003 and Head of the Global Transaction Bank (GTB) and Head of CIB Germany since October 2018. Before this he worked for the bank in New York. He will report to Christian Sewing.
Mark Fedorcik will be Head of the Investement Bank. Fedorcik joined Deutsche Bank through Bankers Trust in 1995 and has had many investment banking leadership roles during his career at Deutsche Bank, including as Head of GTB in the US.
Ram Nayak will lead fixed income and currency sales and trading in the Investment Bank. He joined Deutsche Bank in 2009 after working for Citibank, Merrill Lynch and Credit Suisse. His roles have included chairing CIB’s Capital and Risk Committee and serving as head of its fixed income trading business.
Fedorcik and Nayak will report to Christian Sewing.
Manfred Knof will join Deutsche Bank on August 1, 2019, as the Head of Private Banking Germany. Knof had a long career at the financial institution Allianz, including as CEO of Allianz in Germany from 2015 to 2017. He will report to President Karl von Rohr.
Ashok Aram has been Head of PCB International since October 2018 and CEO of EMEA since November 2015. Apart from a one-year break, Aram has worked for Deutsche Bank for over 20 years in a variety of international management roles at Deutsche Bank. He will report to Karl von Rohr, as well as to Frank Kuhnke in respect of his role in EMEA.
Fabrizio Campelli, who joined Deutsche Bank in 2004, has been the Global Head of Wealth Management since 2015. He was previously Head of Strategy & Organizational Development as well as Deputy Chief Operating Officer for Deutsche Bank Group. He will report to Karl von Rohr.
Louise Kitchen will co-head the Capital Release Unit and represent it on the GMC. She has been at the bank since 2005, most recently as Head of Institutional & Treasury Coverage. She will report to Frank Kuhnke.
Ashley Wilson will co-head the Capital Release Unit. He is currently Head of Global Trading, Equities. He was previously Head of Global Prime Finance and joined Deutsche Bank in January 2014. Prior to joining Deutsche Bank, he held senior positions at Morgan Stanley, Bank of America Merrill Lynch and Barclays. He will report to Frank Kuhnke.
As Chairman of the Management Board of the DWS asset management unit, Asoka Wöhrmann will also be a member of the GMC. In his role as Senior Group Director of Deutsche Bank, he will report to Karl von Rohr.
Christian Sewing, Chief Executive Officer, said:
“We are proud to have assembled this team of great, experienced leaders for the deep transformation on which we are now embarking. I am convinced that together we can build a new entrepreneurial and innovative culture at our bank. I expect unwavering teamwork and integrity. Together we share one goal: to make Deutsche Bank an institution driven by the desire to make our clients happy and successful.”
Significant strategic transformation and restructuring plans
As part of its ongoing commitment to improve long-term profitability and returns to shareholders, Deutsche Bank’s Management Board announces a series of measures to restructure the bank’s operations. These measures include:
The exit of Global Equities and a significant reduction in Corporate and Investment Banking risk weighted assets
Deutsche Bank will exit its Equities Sales & Trading business, while retaining a focused equity capital markets operation. In addition, the bank plans to resize its Fixed Income operations in particular its Rates business and will accelerate the wind-down of its existing non-strategic portfolio. In aggregate, Deutsche Bank will reduce risk-weighted assets currently allocated to these businesses by approximately 40%.
The bank will create a new Capital Release Unit to manage the efficient wind-down of the assets related to business activities, which are being exited or reduced. These assets and businesses represented EUR 74 billion of risk-weighted assets and EUR 288 billion of leverage exposure, as of 31 December 2018.
These actions are designed to allow Deutsche Bank to focus on and invest in its core, market leading businesses of Corporate Banking, Financing, Foreign Exchange, Origination & Advisory, Private Banking, and Asset Management.
A significant restructuring of businesses and infrastructure
Deutsche Bank will implement a cost reduction program designed to reduce adjusted costs to EUR 17 billion in 2022 and is targeting a cost income ratio of 70% in that year.
Statement from Paul Achleitner, Chairman of the Supervisory Board pic.twitter.com/o5Cb8VgxXD
— Deutsche Bank (@DeutscheBank) July 7, 2019
To facilitate its restructuring, Deutsche Bank expects to take approximately EUR 3 billion of aggregate charges in the second quarter of 2019, of which approximately EUR 0.2 billion would impact Common Equity Tier 1 capital. These charges include a Deferred Tax Asset write-down of approximately EUR 2 billion and impairments of approximately EUR 0.9 billion. Additional restructuring charges are expected in the second half of 2019 and subsequent years. In aggregate, Deutsche Bank currently expects cumulative charges of EUR 7.4 billion by the end of 2022.
Managing the transformation through existing resources
Deutsche Bank management intends to fund its transformation from its existing resources without requiring additional capital. This reflects the bank’s current strong capital position as well as management’s confidence in the high quality and low risk nature of the assets, which it is exiting. In connection with these decisions, the Management Board intends to recommend no common equity dividend be paid for the financial years 2019 and 2020. The bank expects to have capacity for payments on additional tier 1 securities throughout the transformation phase.
Updated capital and leverage targets
The Management Board believes that the future business mix is consistent with a lower capital requirement. After consultation with the bank’s regulators, the bank now intends to operate with a minimum CET1 ratio of 12.5% going forward. As a result of the significant deleveraging actions, the bank targets a fully-loaded leverage ratio of 4.5% by the end of 2020 rising to approximately 5% by 2022.
Preliminary Second Quarter Results
Including the charges related to the restructuring described above, Deutsche Bank expects to report a second quarter 2019 loss before income taxes of approximately EUR 500 million and a net loss of EUR 2.8 billion. Excluding these charges, Deutsche Bank expects to report second quarter 2019 income before income taxes of approximately EUR 400 million and net profit of EUR 120 million. Results reflect revenues of EUR 6.2 billion with noninterest expenses of EUR 5.6 billion and adjusted costs of EUR 5.35 billion.
The bank intends to release second quarter results on 24 July 2019.
A message from CEO Christian Sewing to the staff
At the Annual General Meeting in May I said that we would speed-up the transformation of our bank significantly, that we would have to take faster and more radical action. Since then, many of you have asked me when we would announce concrete next steps.
Today is that day: After further stabilising our bank last year, we are now entering the next phase – and that means nothing less than a fundamental transformation of our bank.
First let me say this: I am very much aware that in rebuilding our bank, we are making deep cuts. I personally greatly regret the impact this will have on some of you. In the long-term interests of our bank, however, we have no choice other than to approach this transformation decisively. Only then can we build on our long-standing history and make Deutsche Bank a leading bank once again. A bank which we can be justifiably proud of.
I will not go over all the details that we just published in our media release.
I will stress though that what we have announced today is nothing less than a fundamental rebuilding of Deutsche Bank through which we are ushering in a new era for our bank. This is a rebuilding which, in a way, also takes us back to our roots. We are creating a bank that will be more profitable, leaner, more innovative and more resilient. It is about once again putting the needs of our clients at the centre of what we do – and finally delivering returns for our shareholders again.
The transformation will bring us closer to our core strength, our DNA. Almost 150 years ago, we were founded as a bank that serves German and European companies worldwide, that provides a global network and that paves the road to Europe for international companies and investors. This is exactly the role that the Corporate Bank which we are forming will play. Going forward, our Corporate Bank will also serve the corporate and commercial clients of Deutsche Bank and Postbank in our home market. This division is focused on midcap clients, family-owned companies and multinational corporates. It will hold deposits of more than 200 billion euros and process financial transactions with a value of one billion euros every day.
Alongside our Corporate Bank will be an Investment Bank that connects our corporate clients with capital markets worldwide. In this division, we will concentrate on those areas in which we have a longstanding expertise – credit, fixed income and currencies, as well as strategic advice. Going forward, our Investment Bank will be smaller – but all the more stable and competitive.
The strict separation between private and corporate clients also means we will have a much more focused private client business. In our home market, we are already a market leader in many businesses. It is our stated goal also to achieve that position in areas where we are not yet leading but have strong growth potential by offering innovative digital solutions and outstanding advice. The task is to find ways to combine these two propositions, because it is exactly in this combination that our strength lies. In order to achieve this, we need to manage our cost base more efficiently. That is why we will accelerate the integration of Deutsche Bank and Postbank.
Our goal is clear: We want to achieve a post-tax Return on Tangible Equity (RoTE) of 8 percent by 2022. It is absolutely vital that we achieve this if we want to be competitive in the long term.
We are not too far away from this goal. The RoTE of DWS is already above 10 percent, the Corporate Bank is only slightly below, and we are well on track to reaching that goal in the Private Bank. In the Investment Bank, we are highly profitable and stable in many areas of the business and will improve significantly over the coming years.
In those areas where we are not currently competing to win, we are now taking decisive action. Indeed, we have no choice other than to concentrate our strengths and resources where we play to win and where we can make a true difference for our clients.
That means we will be fundamentally rebuilding our bank. In total, we will be transferring 74 billion euros of risk weighted assets into the Capital Release Unit (CRU) to be sold over the course of the coming years. The term “bad bank”, which is often used in the media, is in this case misleading. Given the high quality and in many cases short duration of the assets, we expect these to be wound down quickly. This will serve to free up significant amounts of capital. As a result, we intend to return 5 billion euros to shareholders from 2022.
The rebuilding will, however, only be successful if we fundamentally reshape our infrastructure – all of the cross-divisional functions supporting the businesses. Here, we also have to become more innovative and more efficient whilst simultaneously strengthening our controls.
Let us start with innovation: We intend to invest 13 billion euros in technology by 2022. In addition, we will have a Management Board member responsible for digitalisation, data and innovation. With Bernd Leukert, we will be joined by someone who was previously in charge of product development at SAP. In the age of cloud-computing and platform economies, he will ensure that we accelerate our progress still further. In doing so, we can build on the many innovations that our bank has developed over the past couple of years.
This, in turn, will give Frank Kuhnke the necessary freedom to concentrate on what he does better than anyone else. He will put the structure and processes of our infrastructure functions to the test and make them leaner and more efficient. For many years, our fixed costs have been way too high, as is demonstrated by our cost-income ratio. We intend to reduce adjusted costs by about 6 billion euros to 17 billion euros by 2022.
One thing is certain – we will not make any sacrifices when it comes to our control functions. On the contrary, we can and will further improve them. That is why we are bringing risk management together with the divisions for compliance and anti-financial crime. These areas which are of utmost importance to our integrity and to trust in our bank will therefore be combined in a single division led by Stuart Lewis.
That brings us to the people who will execute the transformation: our leadership team. One thing is certain: If we are serious about shaping a new Deutsche Bank, change will need to start right at the top. That is a matter of structure as much as of individual team members.
Let me start with the leadership structure that we have also announced today. Going forward, our Management Board – next to our President Karl von Rohr and myself – will only represent the bank’s central functions and regions. This includes Christiana Riley, who will be responsible for our business in the Americas, and Stefan Simon, who will be responsible for Legal and Regulatory Affairs. It is intended that both, alongside Bernd Leukert, will become members of the Management Board as soon as regulatory approvals have been obtained.
On the other hand, we also have a few goodbyes. I would like to whole heartedly thank Sylvie Matherat, Garth Ritchie and Frank Strauß for their service to Deutsche Bank. Together, we have come a long way – especially over the course of the past year. I personally have greatly appreciated the spirit of cooperation with all three of them. However, I am convinced our new structure is an important step forward for our bank – because it will enable us to become more agile and flexible.
We are deliberately separating the business heads from the responsibilities of the Management Board which require a lot of time and attention. Instead, we want to enable those responsible for the business divisions to act as entrepreneurs within our bank – all the while being laser-focused on our clients and what we can offer them. My colleagues and I expect the highest degree of integrity and teamwork. They have to be role models – internally as well as externally. The colleagues that are now joining the newly formed Group Management Committee represent exactly those values.
Our Corporate Bank will be led by Stefan Hoops, who will report to me.
Mark Fedorcik will be Head of the Investment Bank. Ram Nayak will head the Fixed Income and Currencies Business. Both will also report to me.
The Private Bank in Germany will be led by Manfred Knof, former CEO of Allianz Germany. Ashok Aram will lead the international retail business (including international commercial clients) and Fabrizio Campelli will lead the Wealth Management Business. All three will report to my deputy, Karl von Rohr.
Asoka Wöhrmann will continue to lead our asset management business DWS and will also report to Karl von Rohr.
The newly formed Capital Release Unit will be led by Louise Kitchen and Ashley Wilson, both of whom will report to Frank Kuhnke.
The Group Management Committee will be supported by the so-called Senior Leadership Team, the extended management circle. The team will comprise 13 members, representing the relevant infrastructure functions.
We were determined to form a team that would represent trust, strength in innovation and an entrepreneurial mindset – and that would enable us to make a credible fresh start.
Let me summarise again what we are doing:
Going forward, we will have four businesses that will be entirely focused on our clients.
We are focusing our Investment Bank, we will be less dependent on Sales & Trading and are shrinking our balance sheet.
We are creating a Corporate Bank which will be at the centre of our bank.
We aim to reduce our adjusted costs by over a quarter and to simultaneously invest 13 billion euros in technology by 2022.
And we are not asking our shareholders to pay for this transformation but instead plan to return capital to them.
All of this will create a new, better Deutsche Bank.
However, we also have to face the fact that this transformation will require uncomfortable decisions. This is especially true for the sizeable workforce reductions. I can assure you that my colleagues and I appreciate that this impacts people and affects their lives in a profound way. That is why we will do whatever it takes to implement these cuts as responsibly as possible – I consider it our duty to do so. The works councils and employee representatives will be consulted where applicable and statutory participation rights will be safeguarded.
Taking this decision has not been easy. It has far-reaching consequences for our bank – the bank that I have been working at for almost thirty years now.
But I am determined, and so is my leadership team: This is about thinking radically and thinking differently. It is about a new culture. A culture that enables rather than prevents. A culture that always puts the bank and its clients first, before the interests of the individual. A culture where integrity and teamwork are core values. A culture that takes our responsibility for the economy and for society seriously. A culture that we are all proud of and where extraordinarily talented people want to work.
Thank you for your support.
Source: Deutsche Bank
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