Save billions, cut jobs, lower yields: those are some of the plans announced by Deutsche Bank's new co-CEOs. They say they want ideas like this to make the bank more efficient.
Anshu Jain and Jürgen Fitschen, who took over as Deutsche Bank's co-CEOs earlier this year, announced ambitious plans for the future of Germany's largest bank on Tuesday (11.09.2012).
"Deutsche Bank's long-term goal is to emerge from the upheaval in the financial sector as the winner," they said in Frankfurt, during their presentation of the bank's "2015 +" strategy.
A core part of the strategy is a savings program: by 2015, the two leaders aim to reduce expenditures by 4.5 billion euros ($5.7 billion) per year. This includes the slashing of nearly 2,000 jobs, much of them in investment banking, and selling some 40 properties. As of the end of June, Deutsche Bank had 100,654 full-time employees.
Farewell to Ackermann's yield target
Jain and Fitschen have also lowered the bank's yield target to 12 percent. With this move, they have made a definite and final farewell to the goal of their predecessor, Josef Ackermann, to generate a return of 25 percent.
New capital requirements and the consequences of the financial crisis have made that goal almost impossible. The return on equity describes the ratio of profit to return on capital employed.
"The goals set by Deutsche Bank are ambitious and generally higher than the market anticipated," Frank Schneider of the financial service provider Alpha Wertpapierhandel told DW. "Above all, the goal of the after-tax return of at least 12 percent by 2015 is clearly above market expectations."
'Bad bank' for risky securities
With a sort of separate "bad bank," Deutsche Bank plans to protect its core business from risky securities numbered in the billions. These were considered to be asset-backed securities, or other assets previously parked in the bank's investment banking division, and will now no longer be included in the core business. At the end of June, these assets represented balance sheet risks of 135 billion euros. The bank aims to reduce that amount by 45 billion euros by next March.
Jain and Fitschen also aim to strengthen the bank's capital base, which is planned to increase to 8 percent by March and to more than 10 percent by March 2015. Analysts have often criticized the bank's equity base, calling it too tight.
The co-CEOs, however, once again ruled out a capital increase, a move that some in the market had feared might take place, said Schneider. That it didn't happen was reason for relief.
Bankers must wait for bonuses
In terms of bonus payments, Deutsche Bank expects to continue being a forerunner in the industry. In the future, they should be linked to the profits of the relevant division and should be significantly reduced.
"We very much hope that we can find like-minded people. We are not afraid to pay a price for [this decision]," said Fitschen. In 2011, bonuses at Deutsche Bank only made up 11 percent of net revenues; in 2006, they still accounted for 22 percent.
Those at the management level will now also have to wait longer for their share of bonus payments. The entire bonus will now only be paid out after five years. Until now, bonuses were paid out in the first three years after being granted.
Whether Deutsche Bank's "2015 +" will be sufficient to make Germany's largest financial institution a world leader remains to be seen.
"The deciding factor will now be to implement the goals," said Schneider. "To get the market to react, it's crucial to convince the analyst community of the plausibility of these measures."