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Deutsche Bank eyes cuts to investment bank

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(FILES) This file photo taken on January 28, 2016 shows the headquarter building of Deutsche Bank, Germany’s biggest lender in Frankfurt. Deutsche Bank is near a deal with US officials to slash a huge fine over its dealings prior to the 2008 financial crisis, a source said September 30, 2016, sparking a dramatic rally in the German giant’s shares. Stock in Germany’s biggest lender closed at 11.57 euros ($13), up 6.39 percent on Thursday’s close after a flurry of last-minute buying activity following the news the bank had negotiated a much lower fine than expected with the US Department of Justice./ AFP PHOTO / DANIEL ROLAND

Germany’s biggest lender Deutsche Bank could slash parts of its troubled investment banking division this week, media reports suggested Tuesday, as new chief executive Christian Sewing looks to make his mark quickly.

Reforms to the unit could see “extensive” cuts to equities trading in the United States as part of a broader transformation, Bloomberg News reported, citing people familiar with the plans.

German business daily Handelsblatt reported the reforms could see parts of equities trading and services for hedge fund investors trimmed back.

Deutsche Bank declined to comment on the reports when contacted by AFP.

Renewed speculation that Deutsche will announce changes at its investment banking division along with its first-quarter results on Thursday comes weeks after crisis firefighter CEO John Cryan was ousted after less than three years in post.

Investors and the bank’s supervisory board were unhappy with the British boss’s failure to bring the bank back to profitability after years of hangover from its attempt to go toe-to-toe with global investment banking giants.

Deutsche booked a 751-million-euro ($916.5 million) loss last year and saw a 12-percent slump in revenues, its third set of red figures in a row.

The bank said the profits plunge was a one-off due mostly to US President Donald Trump’s tax reform.

But Cryan’s push to refocus the bank on its core German business of retail banking and lending to the economy was advancing too slowly to satisfy shareholders and interventionist supervisory board chair Paul Achleitner.

Sewing urged the bank’s 95,000 employees to rediscover their “hunter mindset” to turn the lender around in a note soon after his nomination to the top job.

But he added that “we will look to free up capacity for growth by pulling back from those areas where we are not sufficiently profitable”.

Also on Tuesday, Deutsche announced that Frank Kuhnke — like Sewing a Deutsche Bank lifer — will become chief operating officer, overseeing its highly-complex and much-criticised IT infrastructure.

The size of the task for the infrastructure boss was made clear last week, when Deutsche mistakenly transferred 28 billion euros — more than its own market value — into an external account.

Shares in Deutsche Bank strongly outperformed the DAX index of blue-chip German shares, gaining 3.6 percent around 1600 (1400 GMT) in Frankfurt to trade at 12.11 euros.


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