Deutsche Bank wants to close hundreds of branches as part of a new strategy aimed at overhauling activities. The plan also foresees cuts in investment banking, with savings totaling billions of euros.
Germany's biggest bank announced on Monday the closure of up to 200 of the 700 branches the bank operates in Germany. The branches were planned to be closed by 2017, Deutsche Bank said.
The announcement follows the decision last Friday to reduce Deutsche Bank's stake in its Postbank subsidiary to less than 50 percent. Postbank is set to be listed on the stock market by the end of 2016.
The Frankfurt-based lender also said that it intended to reduce its operating costs by 3.5 billion euros ($3.8 billion) by 2020, and would exit from unprofitable business segments. The bank, however, wants to increase its spending on digitalization to up to 1 billion euros.
As part of the efforts to increase profitability, Deutsche Bank will cut back its investment banking operations, and invest more in transaction banking as well as its own retail businesses. The bank will slash 200 billion euros ($217.5 billion) in investment bank assets and reduce the number of countries in which it operates.
"Our course for the next five years is simple: we are focusing to deliver value," said co-chief executives Anshu Jain and Juergen Fitschen. "We are confident that, by 2020, Deutsche Bank will be better capitalized and less leveraged; more cost-efficient; well-funded; more value-creating for shareholders; and better governed, with stronger systems and controls," they said.
It is not yet clear how many jobs will be affected on account of the restructuring, which comes at a time when Deutsche Bank is marred by a host of legal issues.
The strategy announcement comes a day after Deutsche reported a 50 percent drop in first-quarter earnings, with hefty legal charges eroding gains in investment banking revenue. British and U.S. regulators fined the bank a record $2.5 billion for manipulating benchmark interest rates, with the potential for further fines from other market investigations.
The bank is also being investigated by authorities for alleged violations of US sanctions against countries such as Iran and accusations of currency manipulation.
Shares in the German lender dropped by more than 3 percent in early trade, the biggest faller among European banks, as investors doubted whether co-chief executives Anshu Jain and Juergen Fitschen would meet their new targets.
sri/uhe (dpa, Reuters)