Stocks

Deutsche Bank Is Announcing A Global Restructuring To Shrink Its Size

Deutsche Bank AG (NYSE:DB) is a German multinational investment bank and financial services company. The bank operates in about 58 countries with a large presence in Europe. The company operates on the departments – the Private and Commercial Bank, the Corporate and investment bank and asset management. Deutsche Bank was founded in Berlin in the end of the 19-century financing foreign trade and promoting German exports. After firing 18 thousand employees, mainly in London, Deutsche Bank is announcing a global restructuring to shrink its size.

The investment bank is exiting the equities sales and trading business, which was one of the main sources of revenues. Three decades ago, the German bank bet to be one of the biggest global investment’s banks in the world. The dismissal of the 18 thousand employees will cost 7,4 billion of euros until 2022. This global bet started in 1989, when Deutsche Bank acquired Morgan Grenfell. In the following years, the bank made acquisitions in Europe and in the United States.

Deutsche Bank global restructuring
sheadquarters / Pixabay

Get The Full Ray Dalio Series in PDF

Get the entire 10-part series on Ray Dalio in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues

Q2 hedge fund letters, conference, scoops etc

CEO Christian Sewing says that is a plan to “become more profitable, improve shareholder returns and drive long-term growth.” The bank was one of the leaders in the US in loans with mortgages as a warranty. Even when its competitors finished doing it, the bank did not stop. In that year, the bank had its first 3,9 billion euros loss after five decades. The scandals do not stop it here. In 2012, the bank was involved in the Libor scandal, where investigations found out that the bank manipulated the average interest rate for self-interest. One of the main executives resigned and the bank had to pay more than 2,5 billion dollars. The bank also pays fines for violating U.S sanctions with countries such as Iran.

This type of activities caught the attention of media and did not make a respectable impression with its image and own results. The last controversy was in the merger negotiations with Commerzbank. The negotiations were interrupted. The bank is creating a new division, the “Corporate Bank” and will focus in this area. In the past, the bank had historical success serving Deutsche Bank and Postbank ‘commercial and corporate clients. The bank did not have a decent performance in three out of the past four years and the restructuring plans can be a change to perform better.

This article first appeared on ValueWalk Premium