Daily Management Review

Deutsche Bank starts a new round of restructuring


Deutsche Bank, which is going through a capital increase of 8 billion euros ($ 8.5 billion), is not currently pondering mergers, the banks’ executive director John Cryan said.

Lucas Kaufmann
Lucas Kaufmann
"We have other things to do", Cryan said at a banking conference in Berlin on Thursday.

Deutsche Bank and its German competitor Commerzbank held talks about a possible merger last summer, but soon postponed the project, as both banks want to complete their restructuring before starting the merger talks. As part of its own modernization, Deutsche Bank was attracting shareholders for cash with a subscription period for new shares ending on Thursday. 

According to people close to the issue, 75-80% of existing shareholders bought new shares on offer, while others sold their subscription rights. Since subscription rights are tradable and have value, the supply of rights in Germany is close to 100%. Some major shareholders, such as Chinese HNA, have already increased their stake in Deutsche Bank. 

In August 2016, head of Deutsche Bank, John Cryan, called on European banks to actively unite, while refuting rumors that the largest German bank plans to take over its competitor in Germany, Commerzbank.

Meanwhile, three heads of the Asian branch of Deutsche Bank and one member of the bank’s senior management in Frankfurt decided to leave the company.

According to Bloomberg, these dismissals are related to lower bonuses paid to the bank’s management on the results of the previous year.

The decision to reduce the amount of bonuses was announced back in January 2017, after Deutsche faced capital adequacy problems, a sharp drop in share prices and protracted legal litigation between the EU and the US. The bank’s CEO, John Cryan, then announced staff cuts, a suspension of dividend payments and sale of risky assets. Reduction of bonuses in Deutsche Bank has been held for the second year in a row, the decrease numbered 17% in 2016.

According to British recruitment agency eFinancialCareers, lower remuneration to the premium management led to a sharp drop in Deutsche Bank’s attractiveness or job-seekers. In 2017 the bank fell to the 15th place among the most popular employers from the 8th place in 2016.

Also, according to people familiar with this matter, Alexander von zur Mühlen, Deutsche Bank’s treasurer since 2009, will leave this position and return to the investment bank where he previously worked.

Zur Mühlen will continue to work under the current financial director Marcus Schenk, who will co-operate the recently recombined investment bank, until name of the new CFO is announced.

The investment bank, the largest division of Deutsche Bank, is being reorganized to concentrate the trading unit, which was separated from the business of advising and bank transactions at the end of 2015.

According to people familiar with the expected reshuffle, new head of the Deutsche Bank treasury will come from the market unit. Dixit Joshi will take the new position after heading the fixed-income sales department.

Joshi's departure from the global markets division is the latest example of how the bank changed its view on the client’s role. Deutsche Bank is still narrowing the list of its customers, trying to regain the market share previously lost in key areas.

A number of current employees, including some of the investment bank and the trading division, were discussed as potential candidates for the position of CFO. However, people close to the bank say that leaders of Deutsche Bank stated that the new employee is more likely to be appointed from outside.

source: reuters.com, bloomberg.com