Published: Fri, April 27, 2018
Health Care | By Alice Shelton

DZ Bank Reaffirms "Buy" Rating for Deutsche Bank (DB)

DZ Bank Reaffirms

Revenue at Deutsche Bank in the first quarter of 2018 fell by 5% year on year to EUR7 billion, mainly because of reduced trading in shares, borrowing and currencies.

Deutsche Bank will take another step back from its decades-long global expansion, announcing Thursday that it will focus its investment banking business more on Europe and reduce operations in the USA and Asia. "There is no time to lose as the current returns for our shareholders are not acceptable".

James von Moltke, chief financial officer at Deutsche Bank, says US operations will be shrinking. Progress was slow and though the bank restored its dividend previous year, shareholders got only 11 cents per share. They've argued that maintaining most of the global investment-banking operations is key to the lender's core mission of serving German companies overseas, while conceding that those businesses do need to be trimmed.

Deutsche Bank's Management Board has agreed on strategic adjustments in its Corporate & Investment Bank.

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In a quarterly-earnings statement Thursday, Deutsche said it would scale back certain areas of its struggling global investment banking business as part of a firm-wide restructuring meant to reverse declining profits.

Christian Sewing, the new CEO of Deutsche Bank expressed that he believes they are on the right track regarding private and commercial banking but they need to boost their profits substantially.

It will kick off a review of its global equities business with a view to "reducing its platform", including pulling back leverage exposure to global prime finance. It joined the ranks of global securities firms with the 1989 purchase of British merchant bank Morgan Grenfell and a decade later purchased Bankers Trust, a NY derivatives house. His ouster this month also claimed another top executive, Marcus Schenck, a former deputy CEO who had been lobbying for a strong securities unit. Deutsche Bank Ag owns $995.32 million in Deutsche Bank Aktiengesellschaft, which represents roughly 3.2% of the company's market cap and approximately 13.52% of the institutional ownership.

Investors have been calling for such moves amid signs that Deutsche Bank's strategy was failing. It increased its estimate for restructuring expenses to 800 million euros this year, up from an earlier estimate of 500 million euros, Chief Financial Officer James von Moltke said. Sewing, a Deutsche Bank veteran who began as an apprentice, is accelerating a push to refocus the lender on its European home market and reverse a two-decade effort to compete head-to-head with the big Wall Street firms, which dominate volatile securities trading. The bulk of the cuts will focus on the U.S. and Asia.

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