Deutsche Bank AG’s CEO Christian Sewing has indicated that his upcoming strategic plan may include the elimination of underperforming divisions to enhance profitability. During a press conference on Thursday, Sewing, who is currently assessing the bank in anticipation of his next strategy update, stated that he might “intervene even more rigorously” in areas where resources are allocated to businesses yielding below-average returns. He mentioned, “We will evaluate whether to reallocate parts of the invested capital or potentially divest certain areas to optimize our capital usage elsewhere.”
These remarks provide a clear signal of Sewing’s intentions to improve profitability beyond the current fiscal year. Recently, Deutsche Bank reaffirmed its revenue, profitability, and payout targets under its existing strategic plan, which is set to conclude this year, but disappointed investors with an increase in cost guidance, leading to a decline in the bank’s shares by as much as 6.3% during trading in Frankfurt.
Chief Financial Officer James von Moltke emphasized that the bank is reviewing all its business units to enhance their performance. He noted that closing certain units is just one of several options, with significant risk transfers also being considered to better allocate capital. Sewing, who has successfully steered the bank through a turnaround since taking the helm nearly seven years ago, plans to reveal his new strategy later this year.
In his first major restructuring effort, just over a year into his tenure, he announced approximately 18,000 job cuts and the closure of the equities trading unit, although he later abandoned that job-cut target. The forthcoming strategy is expected to involve further job reductions to decrease costs and likely include an enhanced profitability target. Sewing remarked, “We are committed to making this bank more efficient, which entails changing our operational methods.” He added that this process will begin with a streamlined organizational structure and a reduced workforce.
Additionally, Sewing indicated that Deutsche Bank aims to pursue growth in the United States as part of its future strategy, following significant workforce reductions in the country after his 2019 restructuring.
