Deutsche Bank is about to undergo its biggest restructuring ever. Here's what we know about what's going on at the German bank.
- Deutsche Bank CEO Christian Sewing is expected to announce a sweeping overhaul of Germany's biggest bank after a supervisory board meeting on Sunday.
- The restructuring will reportedly focus on its US business and could include the cutting of 15,000 to 20,000 jobs.
- We've outlined what we know about what's going on at Deutsche Bank below..
Deutsche Bank CEO Christian Sewing is expected to announce a sweeping overhaul of Germany's biggest bank after a supervisory board meeting on Sunday. The restructuring will reportedly focus on its US business and could include the cutting of 15,000 to 20,000 jobs, or one in six of all full-time employees.
Here's what we know about Deutsche Bank's restructuring:
- Sewing's restructuring plan is expected to be the largest in the bank's history.
- It will reportedly focus on deep cuts to its US operations, which employ more than 9,000 people.
- The job losses are likely to be concentrated in the equities and derivatives trading units.
- US boss Tom Patrick and other senior executives could leave the bank.
- The overhaul could cost the bank as much as 5 billion euros in severance pay and other expenses.
- Garth Ritchie, head of Deutsche Bank's investment banking unit, has agreed to step down.
- Deutsche Bank could create a separate "corporate bank" that would bring together units such as its transaction bank, which provides everyday financial services such as international payments to companies.
- It may also create a "bad bank" to hold billions' worth of non-core assets such as long-dated derivatives.
Here's why the restructuring is happening:
- Since acquiring Bankers Trust in 1999, Deutsche Bank has tried to compete with Goldman Sachs, JPMorgan, and other Wall Street investment banks with little success.
- Deutsche Bank's stock has plunged by more than 25% in the past 12 months.
- Employees are reportedly skipping work, openly searching for new jobs, and going out for drinks in the early afternoon.
- The bank has struggled financially due to rock-bottom interest rates in Europe and fierce competition in the German banking industry, limiting its ability to invest and expand in line with US rivals.
- Deutsche Bank has failed three of the Federal Reserve's stress tests in five years, and although it passed the central bank's latest one, it continues to face restrictions from US regulators due to its compliance failures.
- The bank's proposed merger with domestic rival Commerzbank fell through in April, leading Sewing to promise "tough cutbacks" to turn the lender around.
- US authorities are reportedly investigating whether the bank complied with anti-money-laundering regulations, including its handling of suspicious transactions between Jared Kushner, a White House senior advisor and Donald Trump's son-in-law, and Russians prior to the US presidential election in 2016.
- Deutsche Bank employees reportedly recommended executives flag the suspicious transactions with the US Treasury Department's financial crimes unit, but top executives refused.
- German authorities raided Deutsche Bank in connection with suspected tax evasion in April.
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