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Deutsche Bank to cut costs, shed risks
Source: Agencies |
September 12, 2012, Wednesday
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Print Edition
Print Edition
DEUTSCHE Bank is to cut costs, shed risky investments and tighten executive pay practices as part of an effort to strengthen itself against a slackening global economy and more regulation.
The shakeup follows a 100-day review by new co-CEOs Juergen Fitschen and Anshu Jain, who took over from Josef Ackermann in May.
The measures announced yesterday are aimed at helping the bank face uncertain economic growth and governments demanding banks hold more reserves against losses.
Deutsche Bank is a major player in global banking. It's Germany's largest bank with a large domestic retail operation. Outside Germany, its investment banking division had reaped lucrative fees.
Yet along with other banks, it has seen its earnings fall? especially from investment banking. Second-quarter earnings slid 46 percent to 661 million euros (US$844.49 million) while revenues were down 6 percent to 8 billion euros. The bank attributed the bad results to market turbulence and Europe's financial crisis. The bank has already announced 1,900 job cuts, most of them outside Germany.
Jain told reporters yesterday that the bank wanted to be "an industry leader" in reforming compensation practices, which have been a chief target of for critics of the industry. Large bonuses have been blamed for spurring risky behavior, with losses in the worst cases coming home to taxpayers through bank bailouts. Deutsche Bank shares rose on the announcements and traded 1.4 percent higher in Europe.
The shakeup follows a 100-day review by new co-CEOs Juergen Fitschen and Anshu Jain, who took over from Josef Ackermann in May.
The measures announced yesterday are aimed at helping the bank face uncertain economic growth and governments demanding banks hold more reserves against losses.
Deutsche Bank is a major player in global banking. It's Germany's largest bank with a large domestic retail operation. Outside Germany, its investment banking division had reaped lucrative fees.
Yet along with other banks, it has seen its earnings fall? especially from investment banking. Second-quarter earnings slid 46 percent to 661 million euros (US$844.49 million) while revenues were down 6 percent to 8 billion euros. The bank attributed the bad results to market turbulence and Europe's financial crisis. The bank has already announced 1,900 job cuts, most of them outside Germany.
Jain told reporters yesterday that the bank wanted to be "an industry leader" in reforming compensation practices, which have been a chief target of for critics of the industry. Large bonuses have been blamed for spurring risky behavior, with losses in the worst cases coming home to taxpayers through bank bailouts. Deutsche Bank shares rose on the announcements and traded 1.4 percent higher in Europe.
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