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Major Restructuring At Deutsche Bank Pushes A 832 Million Euro Loss

Major Restructuring At Deutsche Bank Pushes A 832 Million Euro Loss
The third quarter performance of the German lender Deutsche Bank reported a new t loss that was more than what the markets were expecting as the bank’s performance was impacted by a major restructuring plan being implemented in the company.
During the third quarter, the bank made a net loss of 832 million euros ($924 million) while the analysts were expecting the bank to report net loss of 778 million euros as shown by data from Refinitiv. in Comparison in the same quarter a year earlier, the bank had made a net profit of 229 million euros. However in the preceding quarter, the bank had also made a net loss of 3.15 billion euros.
In the aforesaid quarter, the bank reported total net revenues of 5.3 billion euros compared to 6.2 billion euros in the same period a year ago.
“Our results in the quarter are entirely in line with our plans. We are executing, I think, well against the strategic changes we announced in the summer,” James von Moltke, chief financial officer at Deutsche Bank, said. “Our net loss is a little better than our internal planning and our capital ratio at 13.4% stable quarter-on-quarter demonstrates what we set out,” he added.
Since the global financial crisis of 2008, Deutsche Bank had been struggling to gain back foot hold in the market as it was subsequently also hit by the debt crisis in the euro area. The other challenges faced by the bank in recent times include fines amounting to billions of dollars, increased competition in the market, lowering of market share in both commercial and investment banking and a number of continuous changes in its management.
As a part of its plan to revive its business, a wide restructuring plan was announced by Deutsche Bank earlier this year. The bank plans to scale down its investment banking business, completely move out of the global equities business and cut down on thousands of jobs, Christian Sewing, CEO of Deutsche Bank, had said while making that announcement. The German bank plans to cut 18,000 jobs worldwide by 2022.
The total number of employees at the bank was at 89,958 employees — a 5% drop from a year ago, at the end of the third quarter of 2019.
The job cuts are “rolling through the company,” explained von Moltke.  “I wouldn’t expect (a) big announcement of headcount reductions, but (a) steady execution of our plans,” he added.
There was also a drop of 5 per cent year on year in net revenues in investment banking and a 3 per cent drop in net revenues. There was also a 4 per cent year on year drop in revenues form its asset management business.
Higher expenses in its corporate, investment and private banking units were pointed out as challenges it faced during the third quarter, Deutsche Bank said. The measures also included higher spending on controls, technology and internal services. Meanwhile, assets under management rose to 754 billion euros in the third quarter — a 9% increase from a year ago.
The share price of the bank has dropped by about 16 per cent compared to their average price a year ago.

Christopher J. Mitchell

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