Deutsche Bank's Shares Rise After New CEO Talks Tough -- Update
April 09 2018 - 4:34AM
Dow Jones News
(Adds share move, background and further info on the
investment-banking unit.)
By Nathan Allen
Deutsche Bank AG (DBK.XE) shares jumped Monday morning after its
new chief executive said he wouldn't accept missed targets and set
out priorities to turn the German lender around.
"We have to regain our hunger for business, achieve improvements
in all business divisions and set the bar higher," Christian Sewing
said in a letter to employees on his first day on the job.
Deutsche Bank, grappling with a string of full-year losses, said
Sunday it would replace John Cryan as CEO with Mr. Sewing, the
German head of its retail bank, effective immediately.
At 0750 GMT shares in Deutsche Bank were trading 2.9% higher at
11.68 euros ($14.34), having earlier risen as much as 4.7%.
Mr. Sewing said there was "no free lunch" and employees had to
work as a team to return the German lender to profitability. He
said the bank would revise processes to eliminate bureaucracy and
duplication, and hinted at further shakeups at the corporate and
investment banking arm.
While the bank has a sufficient capital cushion, high liquidity
and a strong balance sheet, its investment-banking arm has
struggled with falling revenues. Investors and employees expect
Deutsche Bank to further scale back trading operations, once a
major income source for the investment bank, in moves considered to
be motivated in part by pressure from European and U.S. banking
regulators.
"We'll thoroughly analyze how we want to position this pillar of
our bank in a difficult market environment," Mr. Sewing said in the
letter, which was posted to the bank's website.
In 2017 the lender posted a net loss of EUR751 million--its
third consecutive full-year loss--due in part to a hit from the
U.S. tax reforms, but also because of steep fourth-quarter revenue
declines in all three of its business units.
Mr. Sewing stressed the need for cost control. Cost setbacks,
such as those seen in the fourth quarter of 2017 "are not to be
repeated under any circumstances," he said. Adjusted costs in 2018
must not exceed EUR23 billion euros, he said.
"The time pressure is on and the expectations are high from all
sides: our clients, our investors, the regulators, politicians and
the media," Mr. Sewing said.
Write to Nathan Allen at nathan.allen@dowjones.com
Jenny Strasburg contributed to this article.
(END) Dow Jones Newswires
April 09, 2018 04:19 ET (08:19 GMT)
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