'A difficult pill for management to swallow'.
Deutsche Bank should cut its interest-rates trading business in half in a 'radical slimming' of its investment bank to meet profitability targets, according to Autonomous Research LLP.
'Slashing the rates business by 50% is the obvious way forward' because rates trading accounts for about 20% of leverage ratio assets and makes an estimated 4% return on equity, according to a Feb. 3 note by Autonomous’s London-based founder Stuart Graham that was reviewed by Bloomberg News.
'However, retreating in rates would be a difficult pill for management to swallow, given the firm’s DNA and commitment to be the ‘last man standing.’'
Bloomberg reports that Deutsche Bank, whose co-CEO Anshu Jain helped build the trading businesses, is undertaking a review of its strategy to improve profits and a market value that’s worth less than tangible book.
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