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Deutsche Bank has unveiled one of the most radical banking overhauls since the financial crisis, closing swaths of its trading unit and hiving off €74bn of assets as the struggling German lender calls time on its 20-year attempt to break into the top ranks of Wall Street. Deutsche confirmed it would close down its lossmaking equities trading business and shrink its bond and rates trading operations in a long-awaited announcement on Sunday afternoon. It is also creating a new bad bank — dubbed a “capital release unit” — that will comprise €74bn of risk-weighted assets, equivalent to €288bn of leverage exposure on the balance sheet. Around €3bn of upfront restructuring costs will push the bank into a second-quarter net loss of €2.8bn, and the total bill is expected to rise to €7.4bn by the end of 2022, the bank said in a statement. The bank said it “intends to fund its transformation from its existing resources, without requiring additional capital”. The new strategy by Christian Sewing, chief executive, signals a retreat from Deutsche’s global ambitions and its aim to be Europe’s main rival to Goldman Sachs. One year ahead of Deutsche’s 150th anniversary, Mr Sewing is refocusing the lender on its historic roots — financing German and European corporate clients and domestic retail banking.
