Deutsche Bank cuts 18,000 jobs across businesses in $8.3bn overhaul

Germany's biggest bank unveiled a restructure plan that will see the lender exit its equities unit and shelve dividends this year and next

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Deutsche Bank unveiled a radical overhaul that will see the lender exit its equities business, post a €2.8 billion (Dh11.54bn) second-quarter loss and cut the workforce by a fifth to reverse a slide in profitability.

Chief executive Christian Sewing will shelve the dividend this year and next and take restructuring charges of €7.4bn through 2022 to pay for an overhaul that shrinks the German lender’s once-mighty investment bank along with its global footprint and key fixed-income business.

"Today we have announced the most fundamental transformation of Deutsche Bank in decades," Mr Sewing said. "We are tackling what is necessary to unleash our true potential."

The scale of the revamp underscores the failure of Mr Sewing and his recent predecessors to solve the fundamental problem: costs were too high and revenue too low. After government-brokered merger talks with Commerzbank collapsed in April, the chief executive had few alternatives to bolster market confidence. His plan was approved by the board at a meeting on Sunday.

About €74bn of risk-weighted assets will become part of a new non-core unit and the lender’s capital buffer will be reduced as part of the plan. With a stock price down by half in the past two years, selling new shares was not an option and the bank said it does not plan a capital increase to pay for the overhaul.

Instead, Mr Sewing is tapping into the bank’s capital cushion to fund what he’s billed as the bank’s biggest restructure in decades - which means he needs to be strategic with the little financial resources he can generate. It will be the first time since at least 1993 that Deutsche Bank won’t pay out.

The bank said retail chief Frank Strauss and chief regulatory officer Sylvie Matherat, both board members, will leave this month. The departure of investment bank head Garth Ritchie was announced on Friday.

Other executives will be on the rise. Stefan Hoops was named to oversee the new “corporate bank” unit that will combine the transaction bank and the lender’s corporate-clients unit. Three management board members were appointed: Christiana Riley is taking over responsibilities for the Americas and Bernd Leukert, formerly of SAP, will join September 1 and be responsible for data and innovation. Stefan Simon will become chief administrative officer and oversee regulatory affairs and legal.

The investment bank is the focus of the overhaul plan. The unit, which accounts for roughly half of Deutsche Bank’s revenue and which was cause of its decline, will be broken in two. The transaction bank will be lifted out and merged with the commercial clients segment that is currently within the retail division, sources said.

The change is designed to accelerate the shift away from acting as the first port of call for institutional clients such as asset managers and hedge funds toward selling cash management, trade finance and hedging products to corporate clients. The new division, to be lead by current transaction bank head Stefan Hoops, will be at the heart of the lender’s future business model.

“We remain committed to our global network and will help companies to grow and provide private and institutional clients with the best solutions and advice for their respective needs – in Germany, Europe and around the globe,” Mr Sewing said on Sunday.