Deutsche Bank chief warns of transformational phase for beleaguered bank

Chief executive Christian Sewing tells investors that investment banking division will face cutbacks in effort to reverse fortunes.

Deutsche Bank’s chief executive has warned shareholders that there will be a period of during its Annual General Investors meeting in Frankfurt.

Sewing warned that there would be structural changes to the institution, primarily by merging its compliance and anti-financial crime and non-financial risk management units, which would come alongside “tough cutbacks” to its ailing investment banking division.

In a message to Deutsche Bank staff ahead of his address to investors, Sewing outlined some positives – a return to profitability in 2018 and foundations for the bank to return to sustainable profitability – but explained how a “focus on the infrastructure functions” would be required going forward.

“Our Deutsche Bank needs a sharper focus. We need to be a bank that is fully focused on the needs of clients, less volatile, and more sustainably profitable,” he said.

“We have stabilised the bank. Now, we must follow that with a phase of transformation. The main lines of our transformation are unmistakeable: we aim to generate a post-tax return on tangible equity of 10 percent. To achieve that we must continue to reduce expenses, further develop our technology, boost innovation – and finally, set our core businesses back on the path to growth.”

Deutsche Bank‘s woes, which include a number of money laundering investigations and misconduct charges levelled against former traders for their part in the Libor rigging scandal, also saw a proposed merger with Commerzbank collapse in late April.