Deutsche Bank’s US dreams to be unraveled in revamp

Bloomberg

A little over two decades ago, Deutsche Bank AG set out to become a Wall Street giant. Its CEO Christian Sewing will probably pull the plug on that dream for good soon.
Sewing is poised to unveil the biggest job cuts programme in the bank’s history, including a major retreat across its briefly held US empire, people familiar with the matter have said. The reductions will probably go far beyond the previously targeted equities and interest-rate derivatives trading units and may mark the company’s biggest-ever pullback from the country, they said.
The decision to slash Deutsche Bank’s US presence caps a long period — since the purchase of Wall Street mainstay Bankers Trust — in which it sought to compete toe-to-toe with US banks such as Goldman Sachs Inc and JPMorgan.
The lender stuck with the effort after the financial crisis when its executives believed the challenges experienced by several US banks at the time created an opening.
The strategy went sour all too soon. A series of legal probes and the prolonged failure to bring internal controls in line with tightening regulatory standards drew the ire from regulators including the Fed. At the same time, persistently low interest rates in the euro area and an extremely competitive German banking industry meant Deutsche Bank didn’t have the same stable income from its non-trading operations that has helped fund the vast expansion of its US rivals.
The German lender plans to start informing US workers of the reductions provided its restructuring plan is adopted, the people said, asking not to be identified because the matter is private. They didn’t give further details on which businesses may be affected. The bank may shutter US equities trading entirely and a number of senior executives including US chief Tom Patrick are leaving the bank, other people have said.
North American staff tripled to about 15,000 in 1999 on the Bankers Trust acquisition and didn’t fall below 10,000 until last year. The bank employed 9,253 people in the US at the end of 2018, down more than 10 percent on the previous year on the back of an earlier restructuring by Sewing. At the time, the bank shuttered the Houston office, pulled out of advising the oil and gas industry and trimmed the repo and hedge fund businesses.