9th July 2019

Thousands of jobs to go as Deutsche Bank outlines strategic restructure

As part of its ongoing commitment to improve long-term profitability and returns to shareholders, Deutsche Bank’s Management Board has announced a series of measures to restructure the bank’s operations. These measures include:

The exit of Global Equities and a significant reduction in Corporate and Investment Banking risk weighted assets:
• Deutsche Bank will exit its Equities Sales & Trading business, while retaining a focused equity capital markets operation. In addition, the bank plans to resize its Fixed-Income operations in particular its Rates business and will accelerate the wind-down of its existing non-strategic portfolio. In aggregate, Deutsche Bank will reduce risk-weighted assets currently allocated to these businesses by approximately 40 per cent.

• The bank will create a new Capital Release Unit to manage the efficient wind-down of the assets related to business activities, which are being exited or reduced. These assets and businesses represented EUR74bn of risk-weighted assets and EUR288bn of leverage exposure, as of 31 December, 2018.

• These actions are designed to allow Deutsche Bank to focus on and invest in its core, market leading businesses of Corporate Banking, Financing, Foreign Exchange, Origination & Advisory, Private Banking, and Asset Management.

A significant restructuring of businesses and infrastructure:
• Deutsche Bank will implement a cost reduction program designed to reduce adjusted costs to EUR17b in 2022 and is targeting a cost income ratio of 70 per cent in that year.
• To facilitate its restructuring, Deutsche Bank expects to take approximately EUR3bn of aggregate charges in the second quarter of 2019, of which approximately EUR0.2bn would impact Common Equity Tier 1 capital. These charges include a Deferred Tax Asset write-down of approximately EUR2bn and impairments of approximately EUR0.9bn. Additional restructuring charges are expected in the second half of 2019 and subsequent years. In aggregate, Deutsche Bank currently expects cumulative charges of EUR7.4bn by the end of 2022.

Managing the transformation through existing resources:
• Deutsche Bank management intends to fund its transformation from its existing resources without requiring additional capital. This reflects the bank’s current strong capital position as well as management’s confidence in the high quality and low risk nature of the assets, which it is exiting. In connection with these decisions, the Management Board intends to recommend no common equity dividend be paid for the financial years 2019 and 2020. The bank expects to have capacity for payments on additional tier 1 securities throughout the transformation phase.

Updated capital and leverage targets:
• The Management Board believes that the future business mix is consistent with a lower capital requirement. After consultation with the bank’s regulators, the bank now intends to operate with a minimum CET1 ratio of 12.5 per cent going forward. As a result of the significant deleveraging actions, the bank targets a fully-loaded leverage ratio of 4.5 per cent by the end of 2020 rising to approximately 5 per cent by 2022.

Preliminary Second Quarter Results:
• Including the charges related to the restructuring described above, Deutsche Bank expects to report a second quarter 2019 loss before income taxes of approximately EUR500m and a net loss of EUR2.8bn. Excluding these charges, Deutsche Bank expects to report second quarter 2019 income before income taxes of approximately EUR400m and net profit of EUR120m. Results reflect revenues of EUR6.2bn with non-interest expenses of EUR5.6bn and adjusted costs of EUR5.35bn.
• The bank intends to release second quarter results on 24 July, 2019.

Note: Divisional figures showing the pro-forma effect of resegmentation are unaudited and preliminary and subject to change.