Deutsche Bank is taking a decisive step forward to become stronger and grow again. Decisions agreed by the Management Board and Supervisory Board on March 5, 2017 aim to reinforce the bank’s roots in its home market of Germany and its position as a leading European bank with global reach.
“The Management Board has decided on some fundamental revisions and decisive advances in the strategy we announced in the autumn of 2015... There are three core elements: (1) Strengthening our position in our home market by combining Postbank with our Private & Commercial Clients business, thus creating the clear market leader in Germany; (2) Unleashing the growth potential of Deutsche Asset Management by floating a minority stake; and (3) Reinforcing our business with international corporations by creating a single, integrated corporate and investment bank. This business has been the hallmark of Deutsche Bank since we were founded.”
New financial targets
- Adjusted costs of EUR 22 billion by 2018, and EUR 21 billion by 2021, which includes the adjusted costs of Postbank
- Post-tax Return on Average Tangible Equity of approximately 10% in a normalized operating environment
- CRR/CRD 4 Common Equity Tier 1 capital ratio (fully loaded) of comfortably above 13%
- CRR/CRD 4 leverage ratio according to transitional rules (phase-in) of 4.5%
- Targeting a competitive dividend payout ratio for the financial year 2018 and thereafter
Progress against strategic goals and targets
On March 5, 2017, we announced our intention to increase our equity capital to remove any doubts about our soundness, and create a basis for growth. We successfully completed our capital increase with gross proceeds of EUR 8 billion in April 2017.
We completed the reorganisation of our business operations into three distinct units, with the goals of strengthening each, enhancing client coverage, improving market share and driving efficiencies and growth:
- The new corporate client-led Corporate & Investment Bank (CIB): Our Sales & Trading, Advisory, Financing and Transaction Banking businesses have been merged into one integrated division. The new corporate division “Corporate & Investment Bank” combines the former segments “Global Markets” and “Corporate & Investment Banking”. This forms the basis for the intended shift of our focus in this business to corporate clients while retaining a strong, but more focused institutional client base.
- Largest Private & Commercial Bank (PCB) in Germany: The corporate division “Private & Commercial Bank” combines the businesses with private and commercial clients of Deutsche Bank and Postbank, which formerly had been reported separately, and the wealth management activities for wealthy clients, foundations and family offices. The foundations for Postbank integration have been laid with the establishment of a joint integration and governance structure. The strategic intention to streamline operations and structures and to share one IT platform has also been confirmed. Meanwhile, execution of existing strategic initiatives continues, including implementation of a new go-to-market model, head office streamlining and branch closures in Germany (177 branches in PCC Germany closed as of the end of June 2017).
- An operationally segregated Deutsche Asset Management (Deutsche AM): The corporate division Deutsche Asset Management remains materially unchanged and contains the asset management activities of Deutsche Bank. It focuses on providing investment solutions to individual investors and institutions that serve them. Steps to float up to 25% of Deutsche AM are being taken with the gradual execution of the defined target legal entity structure and operating model.
Significant year on year reduction in costs highlights progress against announced cost targets. In the first half of 2017 adjusted costs were 6% lower compared to the same time period in 2016. This is in part driven by tangible reductions in full-time equivalents (FTE) and increased cost discipline. Overall, internal FTE have dropped from 99,744 in December 2016 to 96,652 in June 2017.
Source: Interim Report as of June 30, 2017