Tuesday, 22 May, 2018

Deutsche Bank Q1 Profit Declines; Revenue Down 5%; Plans Reduction In Workforce

Deutsche Bank unveils major investment bank shake-up plans and workforce cuts as it focuses on Europe UPDATE: New Deutsche Bank Boss To Slash Investment Bank In US
Gustavo Carr | 27 April, 2018, 00:54

Sewing said that job cuts, which will be focused on the investment bank, would be made over the course of 2018.

It said there would be job cuts but did not say how many or where. First-quarter revenues in the investment bank declined 13% to EUR3.8 billion, with fixed-income trading revenues down 16% and equities sales trading revenues down 21%.

Shares in Deutsche Bank plunged as much as 3.7% in Frankfurt, but the losses had been erased by mid-morning. Amundi Pioneer Asset Management Inc. bought a new position in Deutsche Bank in the fourth quarter worth about $303,402,000. This company shares are 7.65% off its target price of $15.91 and the current market capitalization stands at $31.07B.

Earnings from Germany's flagship lender fell short of analysts' expectations in the first quarter.

James von Moltke, chief financial officer at Deutsche Bank, says USA operations will be shrinking.

Cuts are also making their way to the board, which used to have 12 members. The company said the year-on-year development was primarily driven by exchange rate movements, notably the appreciation of the euro against the U.S. dollar, and lower revenues in the Corporate & Investment Bank. The bank will also continue to shed real estate. That is being reduced with three departures as previously announced, while Deutsche Bank said co-head structures in business divisions are discontinued.

Ford scaling back auto business to focus on trucks, SUVs, crossovers
The cuts are aimed at kick-starting a turnaround effort nearly one year after Ford's board ousted its chief executive officer. More capital will be allocated to higher performing areas such as trucks and sport utilities, he said.

The future of the investment bank had been a key factor in the tumultuous management shakeup that saw Christian Sewing take over as chief executive officer this month. That new operations chief, Frank Kuhnke, won't serve on the management board, unlike his predecessor; the role was downgraded to one level below the senior ranks. Bank of Montreal Can lifted its holdings in Deutsche Bank by 318.5% in the fourth quarter. The hedge fund held 975,000 shares of the major banks company at the end of 2017Q4, valued at $18.55 million, down from 1.25M at the end of the previous reported quarter.

In recent weeks, Deutsche Bank executives both publicly and privately have resisted calls to alter the lender's strategy dramatically.

Sewing noted that "Deutsche Bank is deeply rooted in Europe - here we want to provide our clients access to global financing and treasury solutions".

Even compared to other European investment banks still battling through multiyear turnarounds, Deutsche Bank's challenges are huge, investors say.

"We'll still participate in those markets, but it's clearly a scaling back of our ambition we once had in markets like the U.S". Those deficits leave Deutsche Bank more reliant on volatile trading and investment-banking revenues, despite ongoing attempts to depend less on those businesses.