Deutsche Bank intends to reduce its cost base by about €600 million by 2018, and to reduce its business division’s cost income ratio by about 10 percentage points.
The bank’s Strategy 2020 also outlines plans to wind down what has been termed the non-core operations unit, although it is not clear which operations this could affect. It will also implement new accountability measures for its management team.
Co-CEO of Deutsche Bank John Cryan outlined key strategic goals of improving efficiency in order to lower costs; reducing risks through modernisation; becoming more capitalised in order to stay ahead of regulation and market expectations, and to improve discipline and responsibility within the firm.
According to the plans, the number of products offered will be reduced by about a third, and the bank will make efforts to improve efficiency in its operations, and in its head office.
In a bid to become better capitalised, Deutsche Bank intends to reduce risk-weighed assets (RWA) by about €90 billion—including cutting €50 billion from portfolio measures, and selling off its stake in the Chinese Hua Xia Bank.
The cuts are intended to offset anticipated RWA inflation, due to regulations, and will leave the bank with RWA of about €320 billion.
To lower its risk profile, the bank plans to prioritise investment in its know-your-client and anti-money-laundering infrastructure. Measures include a review of risks for specific players, and a long-term plan to stop relationships with those clients and regions with risk levels deemed unacceptable.
In addition, the strategy outlined plans to close about 200 Deutsche Bank branches in Germany, and the complete exit of onshore operations in Argentina, Chile, Mexico, Peru, Uruguay, Denmark, Finland, Norway, Malta and New Zealand.
This also means a reduction in the workforce, with a plan to cut 9,000 full-time positions and 6,000 external contractor positions.
Of the job cuts, Cryan said: “This is never an easy task, and we will not do so lightly. I promise that we will take great care in this process, moving forward together with our workers’ representatives.”
Jürgen Fitschen, co-CEO of Deutsche Bank, said: “Deutsche Bank’s country network is among its strongest credentials for clients. That network, however, has never been static. We adapt it over time, sometimes expanding the number of countries in which we operate and at other times consolidating.”
“In either scenario, one aspect endures: our commitment to serving clients around the world as Germany’s global bank.”
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