Deutsche Bank has today provided an update on its strategy review which was initiated on 1 June 2012. The Bank will communicate further results of its strategy review as planned in September.
Operational efficiency
The Management Board has identified cost savings of approximately $3.7bn compared to the noninterest expenses run-rate for the first half of 2012. These cost reduction measures will include changes to the business and revenue model as well as the implementation of a reengineering program aimed at achieving world-class operating performance with flexibility, quality and robust controls. The savings are net of investments to support business growth, and there will be substantial cost to achieve these savings.
As an immediate action to adjust the platform to the current environment, Deutsche Bank will reduce headcount predominantly outside of Germany by approximately 1,900 positions, including 1,500 positions in Corporate Banking & Securities and related infrastructure areas. These measures are expected to contribute savings of approximately $430m of the overall $3.7bn target on a run-rate basis.
Cultural change
Deutsche Bank is committed to being at the forefront of cultural change in the banking industry. As part of a range of measures to bring about a cultural change, the Bank is reviewing its compensation practices, in order to address both the absolute level of compensation and the relative balance between rewards for shareholders and those for employees. In addition, the Bank is reviewing its codes of personal conduct to ensure that they are in line with its long tradition of doing business to the highest standards.
Capital
The Bank has always maintained, and currently maintains, capital ratios which are comfortably above all regulatory thresholds and plans to continue to do so. In response to second-quarter business conditions, the Bank has identified EUR 29 billion of additional risk-weighted asset reductions and capital building measures, beyond those previously communicated. Some of these measures have already been implemented. Therefore, the Bank continues to expect that at the beginning of 2013, its Core Tier 1 ratio including “phase-in” will be approximately 9%, equivalent to 7.2% on a fully-loaded basis.
By the end of the first quarter of 2013, the Bank’s ambition is to achieve a Basel 3 Core Tier 1 ratio of approximately 10% on a phase-in basis, equivalent to at least 8% on a fully-loaded basis, by means of a wide range of measures to further reduce risk and to build capital organically. The Bank further aims to continue to grow this ratio through the rest of 2013 and beyond. The Bank aims to apply all capital levers at its disposal before considering raising equity from investors.
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