(Bloomberg) -- Deutsche Bank AG is sounding out potential buyers for a wide range of unwanted assets as it lays the groundwork for its most dramatic overhaul in recent history, people with knowledge of the matter said.
Germany’s largest lender is gauging interest for performing and soured loans as well as assets including equity-related securities and interest rate derivatives, the people said, asking not to be identified because the matter is private. Sales would be part of the lender’s plan to shutter or cut unprofitable businesses and place assets in a unit to sell or wind down, the people said.
Chief Executive Officer Christian Sewing is poised to unveil the bank’s restructuring strategy as soon as this week after a long series of previous turnaround efforts failed to lift profitability. He’s now working on a headcount reduction -- as many as 20,000 positions -- that may turn out to be the largest in decades, people familiar with the matter have said.
A spokesman for Deutsche Bank declined to comment.
Some of Deutsche Bank’s heaviest cuts are expected to hit the investment bank as Sewing radically reduces its equities business -- operations that include the firm’s prime brokerage catering to hedge funds. That business is among parts of the company facing potential disposal, the Wall Street Journal reported Tuesday, citing unidentified people familiar with the matter. Still, in such cases, competitors sometimes seek to save money by hiring away talented people instead of buying entire units.
Freeing Capital
The lender’s non-core unit may end up holding as much as 50 billion euros ($56.5 billion) worth of risk-weighted assets as part of Sewing’s plan to shrink the balance sheet and free up capital for other businesses, people familiar with the deliberations have said.
A long list of Wall Street firms could potentially take an interest in picking off pieces of such a portfolio or even the bank’s operations. Investment firms, for example, have been snapping up soured loans from a variety of European lenders. Shoppers in that market have included Cerberus Capital, Apollo Global Management, Oaktree Capital and Lone Star Funds, among others.
Deutsche Bank is seeking to sell most of the assets at or close to current book , the people said. The non-performing loans could be sold in parcels d at between 500 million euros and 5 billion euros, one of the people said. The bank had 347 billion euros worth of risk-weighted assets at the end of the first quarter.
The bank has been focusing its investment banking activities outside Europe on services that directly cater to large European businesses or that are clearly profitable. Sewing at the company’s annual meeting highlighted transaction banking, corporate finance, foreign exchange trading, credit trading and U.S. commercial real estate. He didn’t mention equities and interest rates.
©2019 Bloomberg L.P.
RECOMMENDED FOR YOU
POPULAR