Deutsche Bank is on course to deliver on its ambitious vision and has made solid progress since launching its Strategy 2015+, Co-Chief Executive Officers Jürgen Fitschen and Anshu Jain told shareholders at the Bank’s 2014 Annual General Meeting in Frankfurt on Thursday.
Twenty months after launching Strategy 2015+, they gave a mid-point update on achievements to date and reaffirmed Deutsche Bank’s objectives. By launching an “unprecedented repositioning”, the Bank responded to the tough environment the financial industry faced as the Co-CEOs took office, Jain said, speaking in German.
Deutsche Bank embarked on this strategic journey with clear strengths, including market leadership in Germany, a unique global network and a brand recognised across the world, he said.
“But there was much room for improvement,” Jain noted. “Our capital base was not strong enough and costs were too high. Too many resources were tied up in non-core activities. Our infrastructure needed modernising. Some businesses were not performing to their full potential.”
The leadership team recognised that in the era beyond 2015, Deutsche Bank has the potential to “emerge as a global winner,” and thus re-committed to a global universal banking model – for the sake of clients. This model provides a unique proposition for Germany’s locally based but highly globalised Mittelstand clients, for whom “no German bank is as global as us; no global bank is as German as us,” Jain emphasised.
“We are devoting all our efforts to realising our vision and re-positioning Deutsche Bank,” added Jürgen Fitschen. Outlining the Bank’s full-year 2013 results, he noted that at EUR 8.5bn, the core bank turned in one of the best operating performances in its history – despite challenges such as historically low interest rates, sluggish economic performance, particularly in the eurozone, as well as new regulations and the costs of complying with them.
He said the Bank used fewer resources to achieve this result, having reduced its balance sheet, and transformed the quality of its funding base. “In other words: We generated very strong operating performance off a more efficient, safer and better-balanced platform.”
Fitschen pointed out that, while tighter regulation and macroeconomic headwinds created challenges, the withdrawal of some European competitors from some businesses created opportunities for Deutsche Bank. “Only very few banks globally can aspire to be the leading client-centric global universal bank. And now we are the only European bank that can do so,” he said, adding that it is Deutsche Bank’s “clear objective” to be among the global group of leading banks.
The package of measures announced on May 18 is a decisive response to this changed environment, Fitschen explained. “To be a global leader, we must ensure we have a strong capital base,” he said, outlining the capital increase aimed at raising approximately EUR 8bn of fresh equity capital as well as the successful start to its EUR 5bn programme of raising Additional Tier 1 capital.
Fitschen also reaffirmed the Bank’s objective of EUR 4.5bn in cost savings as part of its Operational Excellence Programme, adding that as of 1Q2014, cumulative savings totalled EUR 2.3bn – ahead of plan. “To reinforce our strategy, we will implement a package of management actions enabling us to respond to the new cost pressures in our environment,” he said.
Fitschen then outlined the Bank’s efforts to anchor cultural change within the organisation. In describing the launch of the values and beliefs in July 2013, he reiterated that Deutsche Bank aspires to be a bank that does not only what is legally permitted, but what is right – even if it means turning down potentially lucrative transactions. Fitschen noted that deep cultural change takes years, but emphasised that the Management Board is very serious about aligning its business for the benefit of clients and society. “We want to be a bank that creates value for you, our shareholders, by putting long-term success over short-term profits,” he said.