The fate of the investor: how Deutsche Bank will change business priorities

Deutsche Bank is preparing a reshuffle, the sale of inefficient assets and business restructuring, trying to overcome record losses. Experts believe DB's abandonment of an investment bank's image is risky. 
Origin source
On Sunday, October 18, Germany's largest banking group Deutsche Bank announced a large-scale reshuffle in top management and management structure reform. The investment bank division will be divided into corporate clients and work with securities.

In addition, the executive board and the majority of the Board of Governors committees abolished, instead creates a board of commissioners general in key areas of business. Also, Deutsche Bank offers dismissal of top management, as well as transposition within the group - for example, COO Henry will Richotte development of digital banking. The German edition of Focus says that the management of the bank may announce a reduction of at least 10 thousand. Employees (of Deutsche Bank at 98 thousand. People work).

Reform Management Bank explains the desire to simplify the corporate structure, "in order to better meet customer needs and regulatory requirements." Details of the reform will be published in the "Strategy 2020", which Deutsche Bank CEO John Cryan will present on 29 October.

Focus expects that the program will beaskryty parts retail sale of Postbank - Bank Group's largest subsidiary, which serves 14 million individuals and employs 15 thousand employees.. Deutsche Bank now owns 94.1% of Postbank shares, previously group said it plans to retain "no more than 50%" of the company. The rest of the shares must either be sold to investors, or to go into free circulation on the stock exchange.

House of cards

The plans Postbank sale became known in late April, turned around the financial fraud scandal at Deutsche Bank. According to the Financial Times, this was the cause of the business restructuring and change of the group management: criminal investigations caused mistrust of customers and billions of dollars in fines shaped hole in the capital and led to a record in 10 years quarterly loss, which, according to the forecast of Deutsche Bank, in the third quarter will be € 6,2 billion. Deutsche Bank has recorded losses, including the difference between the carrying value of its shares Postbank and the amount the company expects to gain for a partial sale of the package (the share of write-offs by Postbank in the general statement is not disclosed).

April 23, the day before aboutyavleniya of the Postbank sale, pre-trial agreement ended a case of manipulation of interbank interest rates (primarily the British LIBOR), which lasted from 2011. Deutsche Bank has undertaken to pay the financial regulators of Great Britain and the United States a total of $ 2.5 billion fine. Traders at Deutsche Bank in collusion with members of other major banks served British regulator distorted information about loans in the interbank market, thereby artificially understating or overstating the total bet.

After the scandal with the distortion of LIBOR, in May, Deutsche Bank said that starting an internal investigation of possible fraud in the Moscow office of the bank. Management Corporation and the Federal Republic of Germany's financial regulator BaFin alerted nature of some OTC transactions: first, the bank sold the securities clients in Russia for rubles and a few seconds later redeemed them on the OTC market in London for dollars. The origin of the money in this case remained unknown. With such a "mirror" transaction customers and credit institutions remained virtually everyone at their assets, but its implementation allows customers to transfer Mr.personal in another currency into another country. Despite the fact that such a transaction is formally considered legitimate, in this case, the top management of Deutsche Bank suspected money laundering.

Initially, the German edition of Manager Magazin sources reported "hundreds of millions of euros" suspicious transactions, in June, we are talking already about $ 6 billion (€ 5,4 billion). Source Bloomberg reported at the time that an internal investigation group started at the request of Bank of Russia in the autumn of 2014. A few days later the head office of Deutsche Bank were searched, however, a bank representative said RBC that they are not related to possible fraud in Russia. In fact, interest in the prosecutor's office led to tax evasion in the trade in securities in one of the banking subsidiaries of the corporation.

In July, an investigation joined American investigators: the Department of Financial Services State of New York sent the bank a request to provide information about clients of the Moscow representative and transfer of business correspondence. Americans are interested, in particular, could the Russian clients in such a way to circumvent the economic sanctionsWest.

In September, Deutsche Bank announced the optimization of its Russian subsidiary: corporate finance department and securities trading will be completely closed for several months. Prior to this source at the bank, RBC reported that these areas do you plan to transfer to London, leaving in Moscow only the brokerage, custody and advisory services (about 40% of the proceeds of the Moscow branch in 2013). At least 200 of the 1,300 employees of the bank in Russia is waiting for the reduction.

Finally, in mid-October, sources told Bloomberg that US regulators confirmed suspicions among Russian clients Deutsche Bank, which might be involved in money laundering, were those fallen under US financial sanctions: primarily businessmen Arkady and Boris Rotenberg. In this indication, they are the persons involved in the US investigation is not, adds the publication.

Deutsche Bank at a Glance

€ 6,2 billion according to his forecast, the loss could reach Deutsche Bank for the third quarter of 2015, largely due to write-downs and trials oferzhek. This is the worst quarterly result of the bank over the last ten years

$ 2.5 billion pledged to pay a fine Deutsche Bank UK financial regulators and the United States on business, has completed a pre-trial agreement, the manipulation of interbank interest rates (primarily the British LIBOR), which lasted from 2011

$ 6 billion is the amount of possible money laundering by Russian customers, perfect in the stock markets in Moscow and London. The Bank conducts an investigation in respect of these transactions

On rose 3.7% Deutsche Bank shares on the Frankfurt Stock Exchange on 19 October after it was announced changes in the company

74th place in terms of assets (91.3 billion rubles.) Held at Deutsche Bank in Russia on October 1, 2015

3.35 billion rubles. Net income amounted to Deutsche Bank on October 1, 2015

55% of the proceeds of the Russian "daughter» Deutsche Bank brought the business of trading in securities. In early September, it was reported that Deutsche Bank is going to bring this part of the Russian business in London

€ 70.8 billion of equity capital Deutsche Bank at the end of the first half of 2015

98,647 people worked in theDeutsche Bank at the end of the first half of 2015, of which 45 807 - in Germany. According to the company's strategy, which will be presented on 29 October reduction could affect up to 10 thousand. Employees

1.3 thousand. People working in the Russian offices of Deutsche Bank. It is expected to be reduced to 200 of them

2796 branches worldwide counts Deutsche Bank, 1833 of them in Germany

Source: Company data, Bloomberg,

Change priority

Briton John Cryan headed by Deutsche Bank in July 2015, a month after the resignation of co-chairman of the Board of Anshu Jain. From 2004 to 2011, Jane led the investment division of the bank and could be responsible for the scam with LIBOR rates, but an internal investigation into Deutsche Bank lifted him of all suspicion. It is expected that the other co-chairman, Jürgen Fitschen, will leave the bank in the spring of 2016.

Cryan, a former chief financial officer of UBS, where the Swiss bank has overcome the consequences of previous crisis and entered the list of 29 systemically important banks in the world, once again forced to deal with crisis management, reducing costs and restoring the confidence now to the Vedasschemu bank in Germany. The profit Cryan plans to enter, reducing staff:. Postbank sale and closure of 10 thousand jobs in the Deutsche Bank 25% will reduce the number of employees in the Group.

The greatest concern of analysts is the restructuring of the investment banking division of the concern. According to the plan, the main division within Deutsche Bank will not take place in the spheres of activity, and on the type of customers: large businesses, institutional investors, asset managers, private clients. Thus, the bank deprives himself of the main trump card: a strong and unified investment division.

"Before Deutsche Bank now faces a very difficult task. They formed investment bank's image, and it is difficult to imagine an investor who will make out in their diamond, giving high profits, "- he said to Bloomberg Managing Causeway Capital Management Conor Muldoon. Financial columnist Frankfurter Allgemeine Zeitung Herald Braunberger notes that the restructuring of the management system is designed to expand Deutsche Bank towards private clients.

While the German press reacted favorably to the stated reforCryan am. The newspaper Süddeutsche Zeitung compared the crisis management Deutsche Bank with another German giant - Volkswagen: «At the head office VW reigns gloom. Guide Deutsche Bank, on the contrary, thinks and acts big. And he does it is that quite clearly. "

Investors also reacted positively to the news of the reforms from the bank's headquarters. On the Frankfurt stock exchange Deutsche Bank Monday's rose by 3.7%.