Germany’s Deutsche Bank is been trying to reinvent itself … again.
According to Bloomberg’s Matt Scully, Deutsche Bank To Restructure Corporate, Investment Banking.
Deutsche Bank AG is giving Marcus Schenck, co-head of the newly combined investment bank and trading business, responsibility for overseeing clients in a reorganization that will see the bank focus on corporate customers, according to a copy of a memo seen by Bloomberg.
Schenck will also take charge of corporate finance, global capital markets and the institutional client group, while co-head Garth Ritchie will deal with products and processes and oversee operations including equities, fixed income and currencies, the email said. The bank is also creating a combined debt, equity and leveraged capital markets business within the investment bank.
The two executives are tasked with striking a balance between stemming a loss of market share that accelerated last year and cutting 700 million euros ($742 million) of costs by 2018. That comes as the bank pivots away from hedge funds and other financial firms, pledging almost two-thirds of the unit’s balance sheet for corporations. In 2011, institutional clients accounted for about twice as much revenue as corporate customers.
“Schenck is extending his grip within the organization,” said Gildas Surry, who helps oversee about 1 billion euros of financial-sector debt at Axiom Alternative Investments in London, including the German lender’s bonds. “He joined Deutsche Bank to pursue an ambitious agenda and today is another milestone in his ascent.”
The basic problem facing Deutsche Bank cannot be solved by simply creating a more complicated structure with co-heads, Particularly if they fight. No, the problem is Deutsche’s sinking earnings per share.
Deutsche Bank is now hovering around 15 Euros per share as EPS continue to fall.
Perhaps Deutsche Bank, Europe’s largest bank, is just too big to … succeed. I understand that DB is in a state of near panic and is trying to reinvent itself (just like large American retailers like Sears trying to reinvest themselves). But with the advent of FINTECH and the gradual tightening of global interest rates (not to mention UK’s Brexit), the massive trading profits are likely to shrink.
And Deutsche Bank, like other European banks, has considerable (7.44 BILLION) in non-performing assets on their balance sheet.
Another problem facing Deutsche Bank is zero interest rate policy that the European Central Bank (ECB) is following. While the US Fed is raising their Fed Funds Target rate, the ECB is stalled at 0% and the UK’s Bank of England is at 25 basis points where the US Fed used to be.
Perhaps Deutsche Bank should just say “Hey. we are just as bad as Germany’s Commerzbank, Italy’s Unicredit and Banco Monte Dei Paschi or UK’s Royal Bank of Scotland.
Fear does crazy things in financial markets.