The Strategist

Deutsche Bank to Cut Costs and Close 200 Branches

04/27/2015 - 15:19

Deutsche Bank is going to place Postbank’s shares in the IPO and expects to completely separate this division by the end of 2016.

Frank Vincentz
Frank Vincentz
The largest financial market participant in Germany Deutsche Bank is going to close 200 branches around the world by 2017, thereby reducing operational costs by 40 percent. It is reported by Deutsche Welle with reference to the official press release of the bank. There is also noted that the remaining 60 percent will be reduced with help of digital technology expansion.

This year the bank is going to save 1.2 billion euros. And by 2020, additional savings should reach 3.5 billion euro. The current program of spending consolidation does not include this amount. In this case, the press service of Deutsche Bank did not say how many employees the layoff, as a result of the measures taken, will affect. By 2020, with additional savings, bank should reach 3.5 billion euro.
According to Deutsche Welle, since 2012, after Anshu Jain and Juergen Fitschen, the current bank leaders were appointed, Deutsche Bank managed to save 3.3 billion euro.

Earlier it was reported that in late March, Deutsche Bank was fined $ 2.5 billion as part of the pre-trial settlement of the case on the manipulation of LIBOR, EURIBOR and TIBOR interest rates. It was reported that the bank's management to pay a fine to American and British regulators. In addition, Deutsche Bank has undertaken to lay off seven senior officials of their offices in London and Frankfurt.

Currently, Deutsche Bank is a universal bank offering its customers in Germany and around the world a complete range of banking services. In other words, its business stands on two pillars: on traditional banking activities, consisting in the current service and lending to private individuals and companies, and investment banking. This trend involves working in the capital market: the placement of securities of states and companies, conduct mergers and acquisitions, stock trading.

In the last two decades, Deutsche Bank’s strategic course management has repeatedly fluctuated between these two poles that periodically led to organizational leapfrog – like when Frankfurt’s headquarters relied on high-yield investment banking and pushed working with small investors into the background, or after the collapse of global stock markets and a sharp reduction in the demand for investment services at the beginning of noughties, again proclaiming the highest priority of work with the population’s deposits.  

A direct result of the reversal in the direction of the not really profitable but sustainable business was the announcement in 2008 purchase of shares the postal bank Postbank released in 2004 on the stock exchange, the main capital of which is approximately 5 million small investors, and an extensive network of branches throughout Germany. By the beginning of 2012, Deutsche Bank brought the size of its stake to 94 percent.  

Now, far more ambitious ideas can stand behind the plans of the sale of Postbank. Conducted by the European Central Bank (ECB) policy record low interest rates and ultra-cheap money has dramatically reduced the attractiveness of work with deposits. So, there are rumors wandering around that other, radical version of the upcoming reorganization of Deutsche Bank is the complete isolation of the entire business with individuals and corporate clients. Thus, created corporation could then be displayed on the stock exchange.
In this case, Deutsche Bank, greatly reduced in size, would focus on investment banking and asset management with money of wealthy clients. In fact, it would mean voluntary renunciation of universal bank model, what is traditional for continental Europe, including Russia, and the shifting to the American model of an investment bank by Goldman Sachs model, which, by the way, is doing pretty good.


< >

Thursday, April 25th 2024 - 03:04 Italian watchdog fines Amazon €10 mln