Deutsche Bank will struggle to revive returns because banking in Germany is structurally unprofitable and the firm has few options, according to Philippe Bodereau, a portfolio manager at Pacific Investment Management Co.
Bloomberg News reports that Deutsche Bank has little choice other than to retain a larger investment bank than European peers, even as regulatory pressure pushes up the costs, Bodereau, Pimco’s lead analyst for global financial institutions said in an interview.
That’s because the crises that hit other euro zone countries forced them to pursue deeper restructuring of their banks, and left German-speaking nations with banking industries that are sub-scale, overcrowded and unprofitable, he said.
'Their core business is structurally unprofitable so they are pushed into other activities', said Bodereau. 'The primary business driver for Deutsche Bank remains its investment bank as the asset management and private banking arms have low profitability. There’s no easy fix'.
To access the complete Bloomberg News article hit the link below: