Deutsche Bank shares slide again on skepticism about turnaround

Deutsche Bank DKBGn.DE shares extended losses on Tuesday on investor doubts that the new chief executive can revive the lender by shrinking the investment bank and returning to its roots as banker to corporate Germany.

Deutsche’s stock price has fallen 12 percent since Sunday’s restructuring announcement to cut 18,000 jobs in a 7.4 billion euro ($8.29 billion) “reinvention”. By 0842 GMT, the stock was down 5.2% on the day, their lowest for two weeks.

Analysts say Christian Sewing, CEO for just over a year, is right to slash Deutsche’s trading desks but question if he can make the plan work in practice when interest rates are still low and U.S. banks have grown their share of the German market.

“Cutting back volatile, capital-intensive and underperforming sales and trading activities, and further reducing the cost base should improve profitability and strengthen leverage, but execution risks are high,” rating agency Fitch said.

Last month, Fitch downgraded the bank to “BBB” status, the lowest investment-grade status.

Deutsche plans to focus on corporate banking and asset and wealth management, areas that can offer more stable revenues than investment banking but are increasingly competitive.

The bank began cutting jobs in its trading business on Monday, with staff laid off in offices stretching from Sydney to New York.

Reuters

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Dean Popplewell

Dean Popplewell

Vice-President of Market Analysis at MarketPulse
Dean Popplewell has nearly two decades of experience trading currencies and fixed income instruments. He has a deep understanding of market fundamentals and the impact of global events on capital markets. He is respected among professional traders for his skilled analysis and career history as global head of trading for firms such as Scotia Capital and BMO Nesbitt Burns. Since joining OANDA in 2006, Dean has played an instrumental role in driving awareness of the forex market as an emerging asset class for retail investors, as well as providing expert counsel to a number of internal teams on how to best serve clients and industry stakeholders.
Dean Popplewell