Deutsche Bank’s 2017 agenda has soldiered forth despite some headwinds from US regulators. Despite being in the midst of a multi-year restructuring plan, the bank’s CEO John Cryan firmly shot down any talks of a potential merger deal, citing other initiatives that the lender will focus on.
Other things to do
Detusche Bank has also engaged in multiple capital increases over the past few years, which has served as fuel for its broad-based restructuring strategy. Its most recent efforts have seen a $8.5 billion capital increase, prompting talks of potential mergers. However, Mr. Cryan shot down these rumors, explaining “We have other things to do,” in a banking conference in Berlin on Thursday.
This is the second time in less than a year Deutsche Bank has been eyed as a potential merger candidate, following last summer’s rumors with Commerzbank – talks were stalled and ultimately scuttled, given that both banks are in the middle of their own respective restructuring projects.
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Rather than a landmark merger in 2017, it is more likely Deutsche Bank will continue on its previously laid out course that has seen it make dramatic attempt to streamline costs. Deutsche Bank also recently went lean with its bonus pool, cutting it a full 80 percent this month in a move that would affect upwards of 100,000 employees. Additionally, the bank called for wide cuts to its staff, estimated at 6 percent of its fixed income staff and 17 percent of its equities personnel globally.
Since stepping into the role in 2015, Mr. Cryan has had one of the toughest jobs in the business, being tasked with authoring a turnaround for the bank’s lagging business in the United States and Europe. More recently, he has embarked on an increasingly ambitious recovery plan that he hopes will help transform the bank into a more sustainable construct moving forward.
Deutsche Bank has been bogged down with multiple regulatory enchantments, including a recent settlement for $7.2 billion with the US Department of Justice, following the mis-selling of mortgage-backed securities. The aftermath saw Mr. Cryan publicly reaffirming Deutsche Bank’s capital strength, attesting to the severity of the situation.
In 2017 however, investors were given an early-year boost following a year-end earnings report that showed losses had narrowed to just -$1.35 billion, down from -$6.8 billion in the year prior. This was the largest endorsement yet that the plan put into place might be succeeding or starting to take shape, as Mr. Cryan himself had repeatedly pressed for caution and patience in authoring a turnaround.