FRANKFURT (Reuters) – Deutsche Bank will cut some 200 billion euros ($217.46 billion) in investment bank assets and exit a tenth of the countries it operates in, as part of a restructuring program that will cost 3.7 billion euros to implement.
The group said on Monday it aimed for 3.5 billion euros in cost savings by exiting low-profit businesses or regions, closing branches, selling Postbank and by increasing automation.
In the group’s profit engine, the investment bank, it aimed to cut back its operations in commodities, uncleared credit default swaps, repurchase agreements and long-dated uncleared derivatives, in moves that would free up capital to fortify the group’s leverage ratio.
Deutsche Bank is selling Postbank and trimming the wings of its investment bank in a broad restructuring it launched after the group fell short of its profit targets and the performance of rivals.
Deutsche aims to achieve a leverage ratio of 5 percent versus 3.4 percent currently, primarily by selling Postbank, cutting investment banking assets and saving up earnings. Deutsche also aims for a dividend payout ratio of 50 percent.
The company would invest further in India and China but reduce the number of foreign offices it runs to about 63 from the current 70.
Deutsche Bank said it had raised its stake in Postbank to nearly 97 percent from 94 percent previously, positioning it to squeeze out remaining Postbank shareholders by August in preparation for a re-flotation of the lender by the end of 2016.
Responding to Germany’s low-margin and highly competitive retail banking market, Deutsche Bank said it would slash 200 branches or more than one fourth of its retail network by 2017, while investing 1 billion euros to improve its digital offering in the entire group.
It also aims to expand its balance sheet in its asset and wealth management business by up to 10 percent per year until 2020, and boost the number of relationship managers by 15 percent in key markets.
(Reporting by Thomas Atkins and Jonathan Gould– Editing by Arno Schuetze and Stephen Coates)
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