Germany's biggest lender has reported a slump in profits in the first quarter, with new CEO Christian Sewing announcing deep cuts at its flagship corporate and investment banking division, aimed at tackling its woes.
Net profit at the Frankfurt, Germany-based banking group dropped to €120 million ($146 million) between January and March this year — about 79 percent less than in the same quarter in the previous year. Revenues also fell, slumping 5.0 percent to €7 billion.
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Deutsche Bank's new chief executive Christian Sewing unveiled the dire figures on Thursday, saying that the crisis-plagued lender needed to "act decisively" to adjust its strategy. "There is no time to lose as the current returns for our shareholders are not acceptable," Sewing said in a statement.
Sewing was promoted to the top job at the bank just this month, replacing hapless former CEO John Cryan, who managed to remedy some of the bank's painful legal hangovers from the financial crisis but failed to steer it back to profitability.
Cryan reported three annual losses in a row and initiated massive restructuring, including layoffs and reducing the lender's dependency on corporate and investment banking.
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Under Sewing, the once-profitable flagship of Deutsche Bank, which still accounted for more than half of its revenue in the first quarter, is expected to suffer even more.
In a separate statement, the group said the unit would in future focus activities primarily on products for its European and multinational clients, "while reducing its exposure to other areas." Deutsche Bank aims to slash its portfolios in the United States and Asia in a shift of focus to clients "whose activities are closely aligned with the strengths of the German and European economies."
In addition, the bank wants to retreat from some trading in bonds and other financial market products in the US to pursue the "more attractive returns" on offer in Europe. And finally, the size of its stocks trading business will face cuts following a review.
In his statement, CEO Sewing also made it clear that there would be "painful but regrettably unavoidable" cuts in staff numbers to ensure "our bank's competitiveness in the long run."
uhe/aos (Reuters, dpa, AFP)