Deutsche Bank to exit its equities business and post a €2.8bn net loss

Bank expects restructuring charges of €7.4bn to pay for radical overhaul

Deutsche Bank’s radical overhaul is slowly taking shape, with a cull of top leadership and better visibility on how many jobs will be cut and how big its non-core bad bank unit will be. Photographer: Alex Kraus/Bloomberg

Deutsche Bank’s radical overhaul is slowly taking shape, with a cull of top leadership and better visibility on how many jobs will be cut and how big its non-core bad bank unit will be. Photographer: Alex Kraus/Bloomberg

 

Deutsche Bank will exit its equities business and post a net loss of €2.8 billion in the second quarter as chief executive Christian Sewing seeks to boost profitability and shrink the German lender’s once-mighty investment banking unit.

The lender expects restructuring charges of €7.4 billion through 2022 to pay for the radical overhaul and will shelve the dividend this year and next, according to a statement on Sunday. About €74 billion of risk-weighted assets will become part of a new non-core unit and the lender’s capital buffer will be reduced as part of the plan, which will avoid tapping shareholders.

The bank said retail chief Frank Strauss and chief regulatory officer Sylvie Matherat, both board members, will leave this month. The departure of investment bank head Garth Ritchie was announced on Friday.

The scale of the revamp underscores the failed turnarounds by Mr Sewing and his predecessors to solve the fundamental problem: costs were too high and revenue too low. After government-brokered merger talks with Commerzbank collapsed in April, the chief executive had few other options to bolster market confidence. His plan was approved by the board at a meeting Sunday.

The statement made no mention of the expected job cuts as part of the plan or changes to the management board. The lender plans to dismiss as many as 20,000 workers as part of its overhaul, according to people with knowledge of the matter.

- Bloomberg