Deutsche Bank to detail job cuts, strategy

Sun Sep 9, 2012 7:25pm EDT
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By Edward Taylor

FRANKFURT (Reuters) - Deutsche Bank's (DBKGn.DE: Quote) new leadership will present plans for building capital and cutting costs on September 11 in an attempt to address analyst doubts over the lender's ability to generate profits in weak financial markets.

After 100 days in office, new co-chief executives Anshu Jain and Juergen Fitschen will present details about where they will focus job cuts, as banks adapt to an industry-wide downturn in investment banking profits.

Deutsche will provide details about a restructuring of asset management, after failing to find a buyer for the division.

Analysts are looking for reasons to re-invest after the bank last year abandoned its target of generating a pretax return on equity (RoE) of 25 percent, and delivered a paltry 6.8 percent pretax RoE in the second quarter.

With increased regulation and lower levels of risk taking, the lender faces a cyclical and structural dip in profit levels, so the strategy update will largely amount to explaining how to shrink the business, analysts said.

"The devil is in the details on the September 11 investor day," J.P. Morgan analysts said, keeping a neutral rating on the stock.

One issue is how well capitalized and how profitable Deutsche Bank needs to be to remain competitive.

J.P. Morgan said Deutsche needs to plug a capital shortfall of $6.2 billion to meet Basel III capital rules by 2013. Because Deutsche has said it will avoid resorting to a capital increase through issuing new shares, the bank will instead shed risky assets.   Continued...

A visitor walks past the bank's logo prior to Deutsche Bank's annual news conference in Frankfurt February 2, 2012. REUTERS/Kai Pfaffenbach