Deutsche Bank to Strengthen Transaction Banking
Published By : 27 Apr 2015 | Published By : QYRESEARCH
Germany based Deutsche Bank AG released the details of its longed-for strategic fix on Monday that is designed to narrow the gap with peers for capital adequacy and profitability. The German player stated that it would downsize its investment banking business and operations related to retail sales while focus on strengthening the transaction banking as well as the asset and the wealth management operations.
But their strategy that is in line with what has been reported in past by The Wall Street Journal, has met with initial skepticism. The shares of Deutsche Bank traded 2.8% down early Monday, comparing to an unaffected benchmark DAX index. The renovation was considered very important because the shares of Deutsche Bank shares were lagging behind many key rivals over the previous three years owing to the lower profitability and extensive legal risks of the bank.
Deutsche Bank will be implementing a new cost-cutting program to decrease the annual costs by US$3.8 billion, ahead of the existing program designed to cut US$4.89 billion in expenses. The bank also reduced its targeted ROE, a major gauge of profitability, to no less than 10% by the end of 2020. In past it aimed at 12% by the end of 2016.
Deutsche Bank stated on Sunday that the legal costs halved its net profit in the first-quarter to around US$606.98 million. It again stated on Monday that it would cut almost US$217 billion in various assets from the investment bank that will see US$868.67 million in disposal costs and US$651 million drop in annual revenue, the strategy chief of Deutsche Bank, Mr. Stefan Krause said to analysts.