Deutsche Bank shares rose 2.5 per cent on Friday to €7.18 as markets anticipated a restructuring announcement. That is far below levels from mid-2015, when the shares traded over €30 per share. Shareholders received a dividend of only 11 cents per share for 2017 and 2018.
The bank said one-time charges from the changes would mean a net loss of €2.8 billion in the second quarter. Excluding the charges, net profit would have been about €120 million
The restructuring follows the failure in April of merger talks with German rival Commerzbank. Deutsche Bank said the combination would not make business sense, but that left open the question of what strategy the bank could pursue to make its business leaner and more profitable.
As part of the restructuring the bank said it would create a separate unit to dispose of billions in investments that are less profitable or no longer fit its strategy. The bank said it did not expect to have to raise additional capital from shareholders.
When complete, the job cuts are to reduce the workforce to 74,000. The bank would not say where the cuts would fall; many of its investment banking activities are carried out in New York and London.
The bank paid billions in fines and settlements related to behaviour before and after the global financial crisis, including a $7.2 billion settlement in 2017 with the Justice Department over selling bonds based on mortgages to people with shaky credit. But that hasn't ended the negative headlines. Two congressional committees have subpoenaed Deutsche Bank documents as part their investigations into US President Donald Trump and his company. Deutsche Bank was one of the few banks willing to lend to Trump after a series of corporate bankruptcies and defaults starting in the early 1990s.
Trump had sued Deutsche Bank to stop the subpoenas, but a judge in May ruled against the president.
- AP
