DB Exits Global Equities

ThatOtherGuy's picture
Rank: King Kong | 1,838

TBH, kind of surprised there hasn't been a wider discussion about the recent drama going on in DB. S&T and effectively ER are basically slashed from the entire organization GLOBALLY. IBD will also be significantly cut back and the overall aim is to cut back 18 THOUSAND heads.

I'm sure there will be people here saying "yeah but...it's ok" and I'll counter that with an anecdote. A few years ago I asked this forum if the changes being made in Credit Suisse will impact ER and general responses were "yeah but it's ok because it's still valued and blah blah." The end result was that half the floor turned over, the culture was collapsed and rebuilt, and half of an incoming class was culled. While CS ER is in a MUCH better place now than before, I think entering during that transition period was a disastrous move that I lucked out with using some political maneuvers and the right senior alliances.

Anyways, would love to hear chirpings from anyone else who has a scoop on DB.

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Comments (4)

Jul 8, 2019

DB is cutting pretty much all non-Frankfurt equity S&T, but their Fixed Income, Currencies, and Trading (FICC) S&T is largely unaffected and continues to be world class, apart from the Rates business which is also being cut.

Not sure what cuts are proposed in IB but I imagine it's more stuff on the ECM side of things rather than coverage / M&A / DCM / LevFin.

60 Wall should be interesting tomorrow morning, but unless you're in Equities or Rates S&T I don't think there is too much to worry about.


Most Helpful
Jul 9, 2019

Can we talk about this a little bit more?

Obviously sensationalist, but could we get some inside commentary as to what's going here?

Again, a VERY large restructuring:

  • Creating a fourth business division called the Corporate Bank which will be comprised of the Global Transaction Bank and the German commercial banking business.
  • Exiting the Equities Sales & Trading business and reducing the amount of capital used by the Fixed-Income Sales & Trading business, in particular Rates.
  • Returning 5 billion euros of capital to shareholders starting in 2022, facilitated by a new Capital Release Unit (CRU) to which the bank plans initially to transfer approximately 288 billion euros, or about 20% of Deutsche Bank's leverage exposure, and 74 billion euros of risk weighted assets (RWA) for wind-down or disposal.
  • Funding the transformation through existing resources including maintaining a minimum Common Equity Tier 1 ratio of 12.5%. The bank expects to execute its restructuring without the need to raise additional capital.
  • As a result, the bank's leverage ratio is expected increase to 4.5% in 2020 and approximately 5% from 2022.
  • Reducing adjusted costs by 2022 by approximately 6 billion euros to 17 billion euros, a reduction by a quarter of the current cost base.
  • Targeting a Return on Tangible Equity of 8% by 2020.
  • Investing 13 billion euros in technology by 2022, to drive efficiency and further improve products and services.

We're getting close to a ten percent (10%) dip on the stock since the news dropped about the restructuring. If you remember back in 2008, DB was the only BB not to take aid from either the US or Germany. What if they're just sitting on a bunch of toxic assets from the crash that they thought they could wade their way through over the years? Printing their 10K when I get back in the office tomorrow.

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Jul 10, 2019

So many European banks still sick from the 2008 financial crisis: DB, UBS, Barclays, Credit Suisse...

I wonder how much of this is due to negative interest rates??

Jul 10, 2019
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