Deutsche Bank shares fall amid disappointing profits, new investment banking plans

Deutsche Bank's new CEO Christian Sewing

Deutsche Bank's new CEO Christian Sewing

Just weeks after ousting chief executive John Cryan and promoting retail banking head Christian Sewing to the top job, Deutsche has outlined a three-step plan to pull back from U.S. rates trading, reduce corporate finance coverage in favour of European clients and put its equities division under review.

Deutsche Bank is under fire from investors following a 79 percent drop in its quarterly net profit since previous year. "There is no time to lose as the current returns for our shareholders are unacceptable". It isn't clear that Deutsche can stop losing market share, or that Barclays is really regaining much. The company said the year-on-year development was primarily driven by exchange rate movements, notably the appreciation of the euro against the USA dollar, and lower revenues in the Corporate & Investment Bank.

It will also withdraw from corporate finance outside of Europe, despite hiring a number of senior US-based dealmakers throughout 2017.

"Commitment to sectors in the U.S. and Asia, in which cross-border activity is limited, will be reduced", it added. By 2021, the firm said it expects roughly half of its revenues to come from its private and commercial banking business, where Sewing had served as president prior to becoming CEO, and from DWS, which spun out last month in an initial public offering. His ouster this month also claimed another top executive, Marcus Schenck, a former deputy CEO who had been lobbying for a strong securities unit. ValuEngine lowered shares of Deutsche Bank from a buy rating to a hold rating in a research report on Wednesday, February 7th.

"We want the focus to be on stabilizing the organization, moving quickly on the decisions we've made and giving clarity to clients in terms of where we are going to continue to participate and where we'll step back", CFO James von Moltke told CNBC's Annette Weisbach in Frankfurt. And, while staff reduction will be "painful" they are "regrettably unavoidable", he added.

Sewing's actions will be just the latest attempt by a Deutsche leader to push through a radical restructuring of the troubled group. Amundi Pioneer Asset Management Inc. bought a new position in Deutsche Bank in the fourth quarter worth about $303,402,000. His plans then, which included thousands of job cuts, came after his predecessor Anshu Jain's attempts to turn the bank's fortunes around. The short interest to Deutsche Bank AG's float is 2.18%.

In the past three weeks, Deutsche Bank announced that two other senior executives besides Mr. Cryan-investment-banking co-head Marcus Schenck and operations and technology chief Kim Hammonds-will leave effective next month.

Pre-tax profit fell 51 percent to 432 million euros, as sales dropped 5 percent to 7 billion euros.

The valuation of the cryptocurrency market is now hovering around $400 billion, which is less than the combined market caps of HSBC and JPMorgan.

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