Shaken and stirred.
Bloomberg reports that Deutsche Bank co-Chief Executive Officers Anshu Jain and Juergen Fitschen, less than four months after taking over from Josef Ackermann, may be preparing the largest revamp at Europe’s biggest bank in eight years.
The leaders, scheduled to present their strategy for the Frankfurt-based lender on Tuesday, are poised to explain how Deutsche Bank plans to increase capital without tapping shareholders, overcome interbank lending probes and cut costs by $3.8bn as revenues slump.
The co-CEOs join peers from UBS AG (UBSN) to Nomura Holdings Inc. in revamping their business as stricter capital rules make some operations unprofitable and Europe’s sovereign-debt crisis drags on. Their task is complicated by legal probes and a compensation system that’s losing credibility amid bank bailouts and diminished profits.
'This will be the biggest overhaul since 2004', said Christopher Wheeler, a Mediobanca SpA (MB) analyst in London with the equivalent of a sell rating on the shares. 'The risks are many and varied'.
Margin pressure and higher capital requirements have become 'the new normal' for Europe’s banks as the crisis curbs client activity and competition increases, Fitschen, 64, said at a Frankfurt conference last week.
Fitschen distanced himself from the 25% return-on-equity target that helped define Ackermann’s tenure as CEO by saying 'banking industry experts think that returns of 14% to 15% would be realistic'. Ackermann had already backed away from the goal in February.
Deutsche announced 1,900 job cuts in July (1,500 over at the investment bank), and some feel that even more headcount reductions are likely.
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