{"id":64176,"date":"2018-04-26T11:43:50","date_gmt":"2018-04-26T11:43:50","guid":{"rendered":"https:\/\/www.biphoo.com\/bipnews\/?p=64176"},"modified":"2018-04-26T11:43:50","modified_gmt":"2018-04-26T11:43:50","slug":"deutsche-bank-scales-back-investment-bank-as-profit-drops","status":"publish","type":"post","link":"https:\/\/www.biphoo.com\/bipnews\/business\/deutsche-bank-scales-back-investment-bank-as-profit-drops.html","title":{"rendered":"Deutsche Bank scales back investment bank as profit drops"},"content":{"rendered":"

Deutsche Bank scales back investment bank as profit drops<\/span><\/strong><\/span><\/h2>\n

Deutsche Bank\u2019s (DBKGn.DE) new chief executive Christian Sewing took firm action on its long-troubled investment bank on Thursday, cutting back bond and equities trading after a dramatic drop in quarterly profit.<\/span><\/p>\n

Deutsche Bank is deeply rooted in Europe \u2013 here we want to provide our clients access to global financing and treasury solutions,\u201d Sewing said, just weeks after becoming its CEO.<\/span><\/p>\n

\u201cThis is what we will focus on more decisively,\u201d Sewing said, in a marked reversal from Deutsche Bank\u2019s global investment banking expansion over three decades, which ultimately landed it with costly regulatory fines.<\/span><\/p>\n

The measures, which will result in job losses and higher restructuring costs and include a scaling-back of Deutsche Bank\u2019s business with hedge funds, are the initial product of a review of the investment bank, known internally as Project Colombo, which is likely to lead to further cuts, bankers said.<\/span><\/p>\n

The bulk of the cuts will focus on the United States and Asia, Deutsche Bank said. It declined to elaborate further but senior executives said job cuts would be \u201csignificant\u201d and that recent efforts to trim personnel would be accelerated.<\/span><\/p>\n

The staff cuts were \u201cpainful but regrettably unavoidable to ensure our bank\u2019s competitiveness in the long run\u201d, Sewing, who has a background in retail banking, auditing and risk, said, adding that 2018 restructuring costs are expected to rise to 800 million euros from an earlier target of 500 million.<\/span><\/p>\n

Deutsche Bank shares were up 0.8 percent by 0925 GMT.<\/span><\/p>\n

Earnings from Germany\u2019s biggest bank fell short of analysts\u2019 expectations in the first quarter, with net income of 120 million euros below the forecast of 379 million, according to a Reuters poll.<\/span><\/p>\n

It was also below the 575 million euros posted in the first quarter of last year.<\/span><\/p>\n

The cuts and weaker-than-expected earnings follow weeks of turmoil at Deutsche Bank, including the ouster of former chief executive John Cryan and the departure of senior managers.<\/span><\/p>\n

Ratings agency Standard & Poor\u2019s said this month it had placed the bank on \u201ccredit watch negative,\u201d signaling a potential downgrade, because the change in chief executive could prolong the lender\u2019s restructuring.<\/span><\/p>\n

But Thursday\u2019s announcements may have a positive impact on the bank\u2019s credit rating, which influences its financing costs, Chief Financial Officer James von Moltke said.<\/span><\/p>\n

Deutsche Bank said the cuts were expected to have a negative impact on 2018 revenues but improve returns in the medium term.<\/span><\/p>\n

The bank said it would scale back U.S. rates sales and trading and it would undertake a review of its global equities business \u201cwith the expectation of reducing its platform\u201d.<\/span><\/p>\n

\u201cCommitment to sectors in the U.S. and Asia, in which cross-border activity is limited, will be reduced,\u201d it added.<\/span><\/p>\n

Overall, the bank expects revenues in its bond trading activities to be flat this year and lower in its equities trading and in advisory business, after witnessing a steep slide in all three divisions in the first quarter.<\/span><\/p>\n

By contrast, Goldman Sachs (GS.N) said this month that is so confident in its recent business boom, especially in trading, that it will pause share buybacks and instead use capital to facilitate trades, loans and deals for customers.<\/span><\/p>\n

All major Wall Street banks have reported bumper first-quarter earnings thanks to a surge in stock trading activity, while Deutsche Bank conceded market share losses.<\/span><\/p>\n

Source:-https:\/\/www.reuters.com\/article\/us-deutsche-bank-results\/deutsche-bank-scales-back-investment-bank-as-profit-drops-idUSKBN1HX0J2<\/span><\/p>\n

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