The bank will set up a new so-called “bad bank” to wind-down unwanted assets.
The plan represents a major retreat from investment banking by Deutsche Bank, which for years had tried to compete as a major force on Wall Street.
As part of the overhaul, the bank will scrap its global equities business, scale back its investment bank and also cut some of its fixed income operations, an area traditionally regarded as one of its strengths.
The bank will set up a new so-called “bad bank” to wind-down unwanted assets, with a value of 74 billion euros of risk-weighted assets.
The depth of the restructuring shows that Deutsche is coming to terms with its failure to keep pace with Wall Street’s big hitters such as JP Morgan Chase & Co and Goldman Sachs.Â The cuts were foreshadowed on Friday, when the head of Deutsche’s investment bank Garth Ritchie agreed to step down.Â
Chief Executive Officer Christian Sewing, who now aims to focus on the bank’s more stable revenue streams, said it was the most fundamental transformation of the bank in decades. “This is a restart,” he said.
“We are creating a bank that will be more profitable, leaner, more innovative and more resilient,” he wrote to staff.
Sewing will now represent the investment bank on the board in a shift that illustrates the divisions’s waning influence.
The CEO had flagged an extensive restructuring in May when he promised shareholders “tough cutbacks” to the investment bank. This followed Deutsche’s failure to agree a merger with rival Commerzbank.Â
Some investors were cautious about the turnaround plan.
Michael Huenseler, head of credit portfolio management at Assenagon Asset Management, said a lot had to go right for the plan to be successful.
“The margin for error is…low,” he said.
Union Investment portfolio manager Alexandra Annecke said the steps were long overdue and noted that the bank’s aim to bring down its cost-to-income ratio to 70% was not ambitious compared with international competitors.
Soon after becoming CEO last year, Sewing started to cut jobs and promised to bring staffing “well below” 90,000. There were media reports from Reuters and others that Deutsche Bank could cut as many as 20,000 jobs – more than one in five of its 91,500 employees.
In the event, the bank said it would reduce headcount to 74,000 by 2022.
Deutsche bank gave no geographic breakdown for the job cuts. The equities business is focused largely in New York and London.
A person with direct knowledge of the matter said job cuts would be distributed around the world, including in Germany.
Stephan Szukalski, head of the DBV union, told Reuters that the measures were in the right direction, echoing the sentiment of the Verdi labor union.
“This could be a real new beginning for Deutsche Bank,” said Szukalski, who also sits on the bank’s supervisory board.
The board met on Sunday to agree the proposed changes, one of the biggest announcements of job cuts at a major investment bank since 2011 when HSBC said it would axe 30,000 jobs.
Deutsche said it expects a 2.8 billion euro ($3.1 billion) net loss in the second quarter as a result of restructuring charges and loss for the full year.
Deutsche will have been in the red for four out of the five last years. Its shares fell to a record low last month.
Founded in 1870, Deutsche has long been a major source of finance and advice for German companies seeking to expand abroad or raise money through the bond or equity markets, a role which had the tacit backing of successive governments in Berlin.
Big cuts to its investment bank could make it harder for the bank to fulfil this role and would mark a reversal of a decades-long expansion that began with its purchase of Morgan Grenfell in London in 1989 and continued a decade later by a takeover of Bankers Trust in the United States.Â Â
The investment bank generates about half of Deutsche’s revenue but is also a volatile business.
Revenue at the division was forecast to fall to 12.4 billion euros this year, according to a consensus of analysts ahead of Sunday’s announced changes. That would mark a fourth consecutive year of decline, down more than 30% from 2015.
In the restructuring, Sewing let go two other members of the management board – head of regulation Sylvie Matherat and head of retail Frank Strauss – and brought in some newcomers.
He also created a corporate bank to streamline services offered throughout the bank, something Sewing called a “core strength”.
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German far-right holds congress with COVID ‘hotspot potential’
About 600 members of AfD due to meet Saturday at an unused nuclear plant in Kalkar city defying pandemic warnings.Hundreds of AfD delegates will gather Saturday for a congress that authorities have warned could become a coronavirus hotspot, as the German far-right party increasingly aligns itself with activists protesting coronavirus restrictions. Six hundred members of…
About 600 members of AfD due to meet Saturday at an unused nuclear plant in Kalkar city defying pandemic warnings.Hundreds of AfD delegates will gather Saturday for a congress that authorities have warned could become a coronavirus hotspot, as the German far-right party increasingly aligns itself with activists protesting coronavirus restrictions.
Six hundred members of the anti-Muslim, anti-immigrant party are due to meet at an unused nuclear plant in western Germany’s Kalkar city to draw up their first concept on pensions.
To win approval for the huge gathering at a time when Germans are asked to limit their contacts to just two households at a time, the Alternative for Germany (AfD) had signed up to stringent rules including compulsory mask-wearing and distancing in the huge hall.
The party’s own security officers are due to ensure that the rules are met, alongside officials from Kalkar city.
Hundreds of police officers will also be deployed to ward off any unruly scenes, as anti-AfD protesters have also announced plans to demonstrate outside.
The event can “become a hotspot,” warned Kalkar’s mayor Britta Schulz, adding that, while it was “irresponsible” to hold such a big event, the political gathering could not be prohibited.
Because new appointments are also due to be made to the AfD’s board during the meeting, the congress is exempted from rules banning large gatherings in the state of North Rhine-Westphalia.
More than 15,000 COVID deaths
In contrast, Chancellor Angela Merkel’s CDU party has twice postponed its congress to elect a new leader because of the risks of coronavirus contagion. The Greens held their meeting online last weekend.
Shrugging off possible risks, the AfD’s health policy spokesman Detlev Spangenberg claimed, “The coronavirus is comparable to the influenza in terms of the course taken by the illness as well as in terms of its lethality. So the serious measures [taken to fight it] are not proportionate.”
Germany has recorded more than a million coronavirus infections. A total of 15,586 people have died from the illness, according to official data.
The AfD has been the focus of repeated controversies since it began life as a eurosceptic outfit seven years ago.
In 2015, as public opinion soured against Chancellor Angela Merkel’s decision to keep Germany’s borders open to hundreds of thousands of people fleeing war in Iraq and Syria, the AfD morphed into an anti-immigration party.
It was rewarded for its Islamophobic positioning at elections in 2017, when voters sent it into the Bundestag for the first time to become the biggest opposition group in parliament.
A year before national elections, the party is once again positioning itself at the side of groups railing against the government – this time over curbs imposed to battle the COVID-19 pandemic.
Party co-chief Alexander Gauland recently accused the government of using “war propaganda” to champion its “corona-dictatorship”.
AfD politicians are now also regularly marching side by side demonstrators against coronavirus curbs.
During the latest round of protests in central Berlin, when violence reached a level that the capital’s police chief said had been unseen in decades, an AfD politician was charged for using a forged medical certificate to claim he could not wear the required nose and mouth covering.
In a separate incident recently, Gauland was forced to apologise after two of the party’s legislators invited to parliament two far-right YouTubers who went on to harass politicians in the building.
Nevertheless, the AfD’s ratings have held at about 10 percent, compared with highs of 15-16 percent at the height of the refugee crisis.
In 2017, German voters sent AfD into the Bundestag for the first time to become the biggest opposition group in parliament [File: Fabian Bimmer/Reuters]Toxic infighting between ultra-conservatives and others in the party has weakened the AfD. Some voters are also turned off by association with neo-Nazi skinheads, as the AfD’s most radical faction “Fluegel” is now the object of official surveillance by Germany’s intelligence agency.
Instead, approval ratings for Merkel – who is due to retire from politics next year – have soared to new heights, as the vast majority of the population voiced satisfaction at her handling of the pandemic.
Saudi Aramco says customers unaffected by Houthi attack on Jeddah
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Monday’s attack knocked out a tank that contained 10 percent of all fuel stored a the Jeddah plant, Saudi Aramco official says.Oil giant Saudi Aramco says customers were unaffected by an attack by Yemen’s Houthi rebels on a petroleum products distribution plant in Saudi Arabia’s Red Sea city of Jeddah.
One of the facility’s tanks was hit by a missile in early on Monday.
The attack knocked out 10 percent of all fuel that was stored at the plant, a Saudi Aramco official said on Tuesday, adding that the tank – one of 13 at the facility – is currently out of action.
The official described the site as a “critical facility” that distributes more than 120,000 barrels of products per day.
A fire caused by the attack was extinguished in about 40 minutes with no casualties, he said.
The attack was confirmed by a Saudi official who told the Saudi state news agency (SPA) it was a “terrorist attack with a projectile”.
The oil company’s production and export facilities are mostly in Saudi Arabia’s Eastern province, more than 1,000km (621 miles) away from Jeddah, across the country.
Announcing the attack, a military spokesman for the Houthis warned that “operations will continue”.
Yahya Sarea said the attack was carried out with a Quds-2 type winged missile. He also posted a satellite image with the label: “North Jeddah bulk plant-Saudi Aramco”.
“The strike was very accurate, and ambulances and fire engines rushed to the target,” Sarea said.
That facility is just southeast of Jeddah’s King Abdulaziz International Airport, an important site that handles incoming Muslim pilgrims en route to nearby Mecca.
Yemen has been mired in conflict since a Saudi-led coalition intervened in March 2015 to restore the Yemeni government, which had been removed from power in the capital Sanaa by Houthi forces in late 2014.
Cross-border attacks by Houthi forces have escalated since late May when a truce prompted by the novel coronavirus pandemic expired. The Saudi-led coalition has responded with air raids on Houthi-held territory.
The Houthis control most of north Yemen and most large urban areas. They say they are fighting a corrupt system.
Sarea said the attack was carried out in response to the Saudi-led coalition’s actions in Yemen.
The claimed attack came just after a visit by outgoing US Secretary of State Mike Pompeo to Saudi Arabia to see Crown Prince Mohammed bin Salman.
The kingdom also just hosted the annual G20 summit, which concluded on Sunday.
US appoints first Venezuela ambassador in a decade amid tensions
The two nations have not exchanged ambassadors since 2010 when relations began to fray under late President Hugo Chávez.The United States has its first ambassador for Venezuela in 10 years despite Washington having no diplomats at its Caracas embassy amid a breakdown in relations. James Story’s nomination as ambassador was confirmed on Wednesday by a…
The two nations have not exchanged ambassadors since 2010 when relations began to fray under late President Hugo Chávez.The United States has its first ambassador for Venezuela in 10 years despite Washington having no diplomats at its Caracas embassy amid a breakdown in relations.
James Story’s nomination as ambassador was confirmed on Wednesday by a US Senate voice vote.
The South Carolina native takes the job that he will carry out from the capital of neighbouring Colombia as Venezuela endures an historic economic and political crisis.
The US and Venezuela have not exchanged ambassadors since 2010 when relations first started to fray under late President Hugo Chávez.
The two nations totally broke diplomatic ties last year, each withdrawing its diplomats shortly after Washington backed Venezuelan opposition leader Juan Guaidó as the country’s leader.
Story, 50, will likely play a key role in helping guide US policy on Venezuela during the transition of President-elect Joe Biden.
Biden’s win has sparked debate among those who back President Donald Trump’s hardline approach of isolating his Venezuelan counterpart Nicolas Maduro and others who say it is time for a new course.
The critics say heavy sanctions have failed to remove Maduro from power, opening Venezuela to US competitors such as China, Russia and Iran, while making life harder on millions of residents of the South American nation.
The US leads a coalition of dozens of nations that rejected Maduro following his election in 2018 to a second term in a vote Washington called fraudulent.
The US has since heavily sanctioned Maduro, his inner circle and the state-run oil firm, attempting to isolate them.
The Trump administration offered a $15m reward for Maduro’s arrest after a US court indicted him on drug charges.