Investors question Deutsche Bank's overhaul

Mon Apr 27, 2015 8:46am EDT
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By Thomas Atkins and Jonathan Gould

FRANKFURT (Reuters) - Deutsche Bank's (DBKGn.DE: Quote) biggest strategic overhaul under co-chief executives Anshu Jain and Juergen Fitschen got a thumbs down from investors on Monday who judged it too little too late.

Germany's flagship lender has trailed rivals under the tenure of Jain and Fitschen who despite the reverberations from the financial crisis stuck to an expensive universal banking model offering everything from mortgages in Germany to derivatives in London.

Faced with tough regulations, weak markets and mounting legal bills from misconduct settlements, Deutsche is now following rivals such as UBS UBSN.VX and Barclays (BARC.L: Quote) in axing unprofitable business lines to boost earnings and shore up its balance sheet.

“Restructuring is going on since 2012. One could have taken much bolder steps much earlier," one shareholder said of the plan that was detailed on Monday.

Shares in the bank skidded nearly 6 percent and were trading down 4.13 percent at 1015 GMT (6.15 a.m. ET).

After four months of deliberations, Jain and Fitschen have decided to cut up to 150 billion euros in investment bank assets, sell their Postbank DPBGn.DE retail division via a stock market listing by the end of 2016 and invest more in equities trading and wealth management.

The plan, which will see the bank take a one-off hit of 3.7 billion euros, is meant to boost cost savings by an annual 3.5 billion euros by 2020 and drive a return on tangible equity, a key measure of profitability, of at least 10 percent in the same period.

But the restructuring strategy was the less radical of two options considered by Deutsche's board and investors viewed it as unambitious. Previously, the bank had targeted a return on equity of 12 percent for 2015.   Continued...

Anshu Jain (R) and Juergen Fitschen, co-CEOs of Deutsche Bank, speak at a news conference in Frankfurt, Germany, April 27, 2015. REUTERS/Kai Pfaffenbach