will withdraw from the Wall Street-dominated trading and lending business, while investors are asked to trust that their new Chief Executive Officer will succeed there I failed.
The message from Thursday ̵
took over the position of CEO in 2015 and again a year ago, when the bank raised $ 8.5 billion in capital.
A freshman in the job, Mr. Cryan admitted – even highlighted – the below-average performance of the bank. The new leadership would do more, faster, and emphasize the importance of serving German and European companies and reducing risks.
Earlier this month, Mr. Cryan was dismissed on his contract at the age of two. He was replaced by Christian Sewing, a 47-year career with Deutsche Bank, most recently in retail and commercial banking.
On Thursday, Deutsche Bank reported lower-than-expected net income in the first quarter and broad declines in sales, saying it would shrink its investment bank in the US and Asia.
The lender essentially gave up defeat to competition with major US banks in areas where these stronger Wall Street banks dominate. Deutsche Bank insisted that it not withdraw from the US, the world's most profitable investment banking market.
Nonetheless, the move could mark the end of an era for a bank that boomed in the United States in two decades and beyond, fueled by profits from its massive global trading business.
Deutsche Bank's message focuses again on its withdrawal from Europe. But details are sparse – including how many investment banking jobs could be eased, how a renewed pullback in trading could impact the unit's revenue, and how Deutsche Bank's new strategic adjustments affect costs.
Deutsche Bank shares fell about 2% at € 11.77 in the afternoon trading in Frankfurt after the early morning decline, then it is flattening out.
The bank said it plans to cost certain investment banking activities that do not justify enough money and justify risks. He described planned job cuts as a "significant reduction in workforce" without giving any figures.
The bank has left major financial targets unchanged, causing some analysts to criticize the moves as too little or too vague to be satisfactory. 19659005] Mr. Sewing asked for patience, but said he wasted no time.
The dire revenues underlined the need for immediate action, he told analysts. He promised more details in the coming months and said that he and other Deutsche Bank executives respect the lost patience of investors.
"The call to action is simple: concentration, revenue growth and significant cost reduction," said Sewing. He said executives would "not be afraid of decisions."
This remark reflected persistent complaints from Deutsche Bank's directors and board members that Mr. Cryan made sharp, analytical, but slow, difficult decisions, according to people inside and outside the bank. Mr. Cryan did not comment on the criticism.
Under Mr. Cryan, Deutsche Bank settled large legal cases that blocked the lender, increased capital and cut spending. However, the bank missed cost-cutting targets, lost market share in key businesses, and recorded three consecutive net losses for the year as a whole.
Deutsche Bank's share price fell by 25% this year and has fallen by more than 30% compared to the previous year.
On Thursday, Deutsche Bank announced that net income in the first quarter fell 79% to 120 million euros ($ 145.9 million). Group-wide revenue decreased 5% to € 7 billion in the quarter. Investment bank sales declined 13% to € 3.8 billion, fixed income securities declined 16%, and equities and trading declined 21%
Euro exchange rates and some one off events intensified the declines. 19659005] Hedge funds will benefit less from Deutsche Bank's balance sheet to boost their transactions through the Prime Brokerage unit, a reversal of Mr. Cryan's earlier plans. The bank plans to shrink its stock trading business, which could hit areas heavily dependent on technology, lagging behind other banks.
Deutsche Bank will reduce US interest rate hedge and certain securities financing and focus on assistance European clients will do business, manage their cash and global payments and hedge currency risks. The bank will continue to sell real estate.
This month, Deutsche Bank announced that two other executives, along with Mr. Cryan Investment Banking, are co-directors
Kim Hammonds, Chief of Operations and Technology, will leave next month.
Previously co-head of the investment bank, now heads the entire division and the bank appointed a new chief operating officer from the retail banking sector.
Some investors have wondered if Deutsche Bank should divide its retail and investment banks, radically redefine the bank. However, executives argue that maintaining a strong, integrated global investment bank is key to the lender's primary mission of supplying German companies overseas.
Other European investment banks are still struggling with multi-year turnarounds, but with big differences.
PLC seems to be moving deeper into investment banking. The UK lender reported improved first-quarter revenue in the unit on Thursday as it was exposed to pressure from a new-coming activist investor.
Deutsche Bank's German home market is cautious in the US and UK in terms of profitability and retail banking. And compared to the major Swiss competitors, Deutsche Bank lacks private banking and asset management. Executives said on Thursday that they would balance companies on "more stable sources of revenue."
Write to Jenny Strasburg at [email protected]